RHDR Full Report Tackling Corruption Transforming Lives

TACKLINGCORRUPTION,TRANSFORMINGLIVESAccelerating Human Developmentin Asia and the Pacific

Published for theUnited NationsDevelopment Programme

Copyright ©2008by the United Nations Development ProgrammeRegional Centre in Colombo, Human Development Report Unit23 Independence Avenue, Colombo 7, Sri Lanka

All rights reserved. No part of this publication may be reproduced ortransmitted, in any form or by any means, without permission.Any person who does any unauthorised act in relation to this publicationmay be liable to criminal prosecution and civil claims for damages.

First published, 2008

Published for UNDP by Macmillan India Ltd.

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TEAM FOR THE PREPARATION OF THEAsia-Pacific Human Development Report

TACKLING CORRUPTION, TRANSFORMING LIVES

Team LeaderAnuradha Rajivan

Core Team: Gry Ballestad, Elena Borsatti,Ramesh Gampat, Renata Rubian, NiranjanSarangi, Ruwanthi Senarathne, OmarSiddique, Manoja Wickramarathne

Statistics team: Ramesh Gampat,Niranjan Sarangi, Ruwanthi Senarathne,Manoja Wickramarathne

Editor: Peter Stalker

Designer: Rustam Vania

Publishers: Macmillan India Ltd.

The Asia-Pacific Human DevelopmentReport Unit (HDRU), Regional Centrein Colombo (RCC)

The HDRU team members, both past andpresent, who worked on this collaborativeeffort are Gry Ballestad, Bineswaree(Aruna) Bolaky, Elena Borsatti, HasnaCheema, Kay Kirby Dorji, RameshGampat, Sonia Gomez, Anuradha Rajivan,Renata Rubian, Niranjan Sarangi,Ruwanthi Senarathne, Omar Siddique,Bronwyn Walker and ManojaWickramarathne.

The Asia-Pacific Regional Human Development Report (APHDR) is an importantresource and instrument to explore critical development concerns. The Report thusinforms policies from a human development perspective, putting people at the centre ofdevelopment debates. As a regional public good, the APHDR focuses on issues that areof common concern to several countries in the region, have sensitivities that are betteraddressed at a regional level, or have clear cross-border dimensions.

The APHDR is an independent intellectual exercise developed through a regionalparticipatory process that draws from the contributions of many. The theme for eachReport is also selected through consultations that include participants within and outsideUNDP. The more nuanced focus of the Report is guided by substantive and diverseinputs that bring together Asia-Pacific stakeholders from governments, civil society,academia, research institutions, the media, the private sector and others. Technicalbackground papers are prepared by eminent experts drawn largely from the Region. Anestablished peer review process contributes to quality and impartiality. The work isenriched by a moderated discussion on the Asia-Pacific Human Development Network,which comprises members from the Region and beyond. Drawing from this rich material,the Report is prepared by the Human Development Report Unit team. The APHDR isdisseminated widely, helping to promote dialogue and bring together the people of AsiaPacific to accelerate human development.

About the Asia-Pacific Human Development Report

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This Report comes on the heels of thelandmark Second Session of the Conferenceof State Parties to the United NationsConvention against Corruption in Bali,Indonesia, which is aiding countries in theimplementation of their anti-corruptionefforts. The United Nations ConventionAgainst Corruption (UNCAC) is the firstlegally binding, international anti-corruptioninstrument that provides a unique opportu-nity to mount a global response to a globalproblem. This Regional Human DevelopmentReport examines the problem of corruptionfrom the perspective of the countries of Asiaand the Pacific. In doing so, it builds on themomentum around the UNCAC mobilization,and hopes to contribute to the agenda forchange. This publication is also timely – thisis the halfway mark in the timetable forachieving the Millennium DevelopmentGoals, and it addresses corruption surround-ing the exploitation of natural resources, at atime when concerns about climate change arereaching a peak in this most dynamic regionof the world. The Report documents thechallenge corruption poses for human deve-lopment and the solutions that are beingattempted to address this multi-dimensionalproblem.

The focus on corruption from a humandevelopment perspective makes this Reportunique. It hones in on the price corruptionextracts from the poor and disadvantaged,especially in their daily lives. It spotlightshidden forms of corruption that get lessmedia attention. These include the passing oflaws and regulations which allow corruptionto be conducted within legal bounds. The

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misleadingly termed ‘petty corruption’, whichtakes its toll on vast numbers of people, isjust as weighty as ‘grand corruption’, whichgets the lion’s share of publicity. Cross-borderissues, increasingly important for this rapidlyglobalizing region, are also explored.

Corruption undermines democraticinstitutions, retards economic developmentand contributes to government instability. Itattacks the foundation of democraticinstitutions by distorting electoral processes,perverting the rule of law and creatingbureaucratic quagmires whose only reason forexistence is the soliciting of bribes. Economicdevelopment is stunted because outside directinvestment is discouraged and small busi-nesses within the country often find itimpossible to overcome the ‘start-up costs’required, because of corruption. As KofiAnnan, the former UN Secretary-Generalremarked, ‘Corruption hurts the poor dis-proportionately by diverting funds intended fordevelopment, undermining a government’sability to provide basic services, feeding inequa-lity and injustice, and discouraging foreigninvestment and aid.’

In a diverse region like the Asia-Pacific,which is attempting the twin task ofdevelopment and democratic consolidation,the problem of corruption goes to its very core.It diminishes not only the outcomes we seekto achieve, but also corrodes the instrumentsand mechanisms we have at our disposal todo so. Many democratic regimes have beenoverthrown because elected governmentsfailed not only to deliver results; they abusedtheir offices for securing private gains. Butnon-democratic regimes that replaced them,

also have not been able to resolve the problemof corruption. While non-democratic regimesmay initially appear to curb visible corruptionthrough strong action, they are neitheraccountable nor responsive to the people theygovern, in the way democratic institutions canbe. The solutions lie, therefore, in more andbetter quality of democracy; in terms ofreinvigorated democratic institutions andvibrant democratic practice.

Governments, civil society and companiesaround the world are showing that it ispossible to stymie high levels of corruption.Those in the Asia-Pacific region have wonsome battles against it. Home-grown successstories brought to the fore in this Report couldhelp dissipate defeatist attitudes, whichconsider corruption as an incurable ailment.The solutions in these pages seek to deepenthe burgeoning momentum for change andhelp countries identify and strengthen theirown strategies.

This Regional Human DevelopmentReport is, ultimately, by and for the people ofthe region. Stakeholders from Asia-Pacificcountries not only identified corruption asone of the most pressing concerns for theregion, they also contributed to lively andoften intensive discussions with views,suggestions for focus areas and solutions.Those actors included government officials,media, private sector, academia and civilsociety organizations. Contributions fromexperts drawn largely from the region thenhelped shape arguments and messages. Theentire process has been truly collaborative.

Solutions form the heart of this Report.Options are presented of relevance not just tonations, but also to the region and the globe.Tackling corruption in Asia-Pacific is aninternational responsibility that goes beyondgovernments, after all. It needs to be sharedby transnational companies, internationalbanks, multilateral agencies, aid agencies,civil society organizations, media and indivi-duals alike. Today, combating corruptionmakes more political sense than ever before.This is especially so in sectors like water andelectricity, and health and education, whichcan greatly promote citizen satisfaction.

The Report is action-oriented, andproposes a seven-point agenda for change,building upon ongoing anti-corruption efforts.These parallel and reinforce efforts forachieving the MDGs by improving develop-mental results and building the tools todeliver. The Report therefore provides acoherent, comprehensive vision for tacklingthe problem of corruption in the Asia-Pacificregion, and proposes interventions that addto a concerted, robust response. This vision isnot fantasy; it is about the reality withinreach.

31.12.2007 Hafiz A. PashaDirector, Regional Bureau for Asia

and the Pacific, UNDP

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The analysis and policy recommendations of this Report do not necessarily reflect the views of the UnitedNations Development Programme, its Executive Board or its Member States. Mention of firm names andcommercial products does not imply endorsement of the United Nations. The Report is an independentpublication commissioned by UNDP. It is the fruit of a collaborative effort by a team of eminent experts,stakeholders, and the HDRU team of the RCC led by Anuradha Rajivan.

The real price of corruption is not paid incurrency, after all. The true costs are erodedopportunities, increased marginalisation ofthe disadvantaged and feelings of injustice.The myth that nothing can be done to curbcorruption seems to be nearly as pervasive ascorruption itself. This Asia Pacific HumanDevelopment Report, Tackling Corruption,Transforming Lives, shows that widespreadcorruption does not have to be an inevitablepart of going about one’s everyday life anddoing business. The Report prioritisestackling corruption in areas that can improvedaily lives, particularly of the poor. Improvingjustice systems, preventing misuse of theregion’s abundant natural resources andensuring the effective delivery of publicservices, such as clean water, energy, healthand education, touch people everyday. Theseimprovements are also critical for progresstowards the Millennium Development Goals.

The Report aims to demystify certainmisconceptions surrounding a complexphenomenon – aspects of corruption that areless well known and hence tend to be ignored.Sometimes behind closed doors, sometimesopenly on the floors of parliaments, laws arepassed, which allow corruption to be legal.Meanwhile, misleadingly termed ‘pettycorruption’ can be just as, if not more,crushing as grand corruption, hitting hardespecially at the poor.

Tackling corruption in the Asia-Pacific isa responsibility to be shared by governments,the private sector, international organizations,civil society and the media. Individuals mustalso assert themselves as citizens and

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consumers. As corruption is not confined tocountry borders, it is necessary for solutionsto be a global responsibility to be shared bymulti-national companies, internationalbanks and aid agencies alike. This Asia PacificHDR proposes combining political will fromthe top with people’s voices from below, eachstrengthening the other.

How best can social policy be shieldedfrom the power of narrow special interests?How can the poorest segments of society havea stronger voice? Particular solutions willdepend on every country’s specific circum-stances. Reducing corruption is ultimately inthe long-term interest of all layers of society,promoting justice and legitimacy of institu-tions, with the disadvantaged benefiting themost. We hope that this Report will contri-bute to constructive debate. The Asia Pacificregion, well known for its dynamism, can seizethe momentum for change to mobilise supportwithin and across borders to build more justsocieties. There is much to be gained.

The publication of this Report is espe-cially opportune. The year 2008 started withthe Second Session of the Conference of StateParties to the United Nations Conventionagainst Corruption (UNCAC) held in NusaDua, Indonesia, in January. The UNCAC isthe first legally binding international anti-corruption instrument, providing a uniqueopportunity for a global response to a globalproblem that pervades institutions withincountries and crosses national borders.

The Report benefited enormously fromthe ongoing guidance and support of HafizPasha. He worked with the Team more like a

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member than a Bureau Director and saw theHuman Development Report Unit throughthe many twists and turns in the course of

this work. On behalf of the Regional Centrein Colombo, we would like say a very specialthank you to him.

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Omar Noman Anuradha K. RajivanChief of Policies & Programmes Regional Programme CoordinatorUNDP Regional Center in Colombo Human Development Report Unit

UNDP Regional Center in Colombo

AcknowledgAcknowledgAcknowledgAcknowledgAcknowledgementsementsementsementsements

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The Asia Pacific Human Development Reportis the result of an intensively collaborativeprocess with contributions from many people,too many to individually name. A range ofstakeholders, largely from the region,contributed to the content: experts, academia,the media, private sector, governments, CSOsand UNDP country offices from the AsiaPacific. Hafiz Pasha inspired and guided thework, and provided numerous substantiveinputs. Colleagues from the Regional Centrein Colombo provided excellent supportthroughout the process of the Report’spreparation.

ContributorsContributorsContributorsContributorsContributors

Numerous background papers, papers,drafts, special contributions and notescovering a wide range of issues have informedthe Report. The main contributors were: JensChristopher Andvig, Omar Azfar, SaraAzfar, Gry Ballestad, Bineswaree (Aruna)Bolaky, Elena Borsatti, Neera Burra, HiramE. Chodosh, Sheila S. Coronel, Sergio Feld,Ramesh Gampat, Sonia Gomez, Kevin Evans,Manzoor Hasan, Angela Hawken, MichaelJohnston, Patrick Keuleers, C. Raj Kumar,Molly Lipscomb, Tenen Masduki, TobyMendel, Ajit Mishra, Satish C. Mishra,Ahmed Musfiq Mobarak, Gerardo L. Munck,Omar Noman, Jon S.T. Quah, R.K.Raghavan, Anuradha Rajivan, RenataRubian, Niranjan Sarangi, BasheerhamadShadrach, Nazhat Shameem, AmitShrivastava, Omar Siddique, M. Sohail,Andre Standing, Paul Steele, and Ngoc AnhTran, Manoja Wickramarathne and ZengkeHe.

TTTTTechnical Consultationsechnical Consultationsechnical Consultationsechnical Consultationsechnical Consultations

The Report also draws on the feedback, viewsand opinions expressed in regional technicalmeetings as part of the report preparationprocess. Participants were: Shahid Akhtar,Anne-Isabelle Degryse-Blateau, Sara FerrerOlivella, Elisabeth Fong, Ramesh Gampat,Douglas Gardner, Sonia Gomez, Cherie Hart,Jak Jabes, Roshni Karwal, Iori Kato, PatrickKeuleers, Kay Kirby Dorji, AmornsakKitthananan, Marcia V.J. Kran, TanniMukhopadhyay, Gerardo Munck, B. Murali,Omar Noman, Koh Miyaoi, Hafiz Pasha,Minh Pham, Anuradha Rajivan, BharatRamaswami, Ramachandran Ramaswamy,Renata Rubian, Niranjan Sarangi, RuwanthiSenarathne, Omar Siddique, Narin Sok, PeterStalker, Surekha Subarwal, R. Sudarshan,Nils Taxell and Garry Wiseman.

Stakeholder ConsultationsStakeholder ConsultationsStakeholder ConsultationsStakeholder ConsultationsStakeholder Consultations

The Report benefited from the rich andfruitful interaction with a wide cross-sectionof stakeholders in a series of focused, sub-regional (East Asia, South Asia, and thePacific) consultations. Stakeholders camefrom academia, governments, the media,private sector, CSOs, think tanks and UNentities. Participants were: MirwaisAhmadzai, Shahid Akhtar, Jolene Akolo-Tautakitaki, Roby Alampay, Ranjan KrishnaAryal, Amir Ayaz, Gry Ballestad, Abdul Bari,Kevin Barr, Suki Beavers, Sharon Bhagwan-Rolls, Hakan Bjorkman, Georgina Bonin,Blandine Boulekome, Tungane Broadbent,Radnaa Burmaa, Jinsong Chen, Chea Chet,Bounthavy Chittilath, Eun-Chim (Jennifer)

Choi, Nicasio Conti, Manuel Coutinho CarmoBucar Corte Real, Nikhil Dey, Richard Dictus,Kunda Dixit, Kevins Evans, Elizabeth Fong,Ramesh Gampat, Sonia Gomez, MajidHamedani, Maumoon Hameed, AnthonyHarold, Cherie Hart, Manzoor Hasan,Graham Hassal, Angie Heffernan, NaomiHossain, Henry Ivarature, Jak Jabes, VaasiliJackson, Mohammad Jasin, Anita Jowitt,Sung-Goo Kang, Sapna Karim, Iori Kato,McAnthony Keah, Patrick Keuleers, IsaakoKine, Kay Kirby Dorji, Marcia Kran, WalterLadhuwahetty, Vincent Lazatin, Jing Li, JonasLovkrona, Rigo Lua, Marito Magno, MatthiasMeier, Manju Menon, Joana Merlin-Scholtes,Tanni Mukhopadhyay, Gerardo Munck,Tsend Munkhorgil, B. Murali, U. Myint,Apenisa Naigulevu, Hannaline Nalau Ilo,Jennifer Navarro, Sharad C. Neupane, HoangNgoc Giao, Yoko Nishimoto, Omar Noman,Beatrice Olsson, Tonet Ortega, T. Palanivel,Hafiz Pasha, Minh Pham, Oseah PhilemonObe, Thone Phonephachanh, Hla Phyu Chit,Eugenia Piza-Lopez, Shoma Prasad, Jon S.T.Quah, Coco Quisumbing, Bishal Rai,Anuradha Rajivan, Bharat Ramaswami,Ramchandra Ramasamy, PiyasenaRanansinghe, Ashraf Rasheed, R.Rathakirushnam, Steven Ratuva, NicholasRosellini, Renata Rubian, Ahmad Salari,Abdul Razique Samadi, Abdul Samat,Alyeksandr Sarangerel, Niranjan Sarangi,Sadhana Sen, Ruwanthi Senarathne, NazhatShameem, Deepali Sharma, Beda PrasadShiwakoti, Shreekrishna Shrestha, AtapanaSiakimotu, Omar Siddique, Manish Sisodia,Narin Sok, Nguonphna Sophea, Soukhampet,Shennia Spillane, Peter Stalker, Paul Steele,Surekha Subarwal, R. Sudarshan, Jae-SikSuh, George Sulliman, John Taimalelagi,Ronald Talasasa, Nils Taxell, NandakumarThamotheran, Ted Thomas, Claire Thoms,Kurbabeb T. Toily, Ngoc Anh Tran, Nualnoi

Treera, Chung Tsung Ping, Nguyen TuanAnh, Joseph Turia, Chander Vasudev, HeavVeasna, Juree Vichit Vadakarn, CeciliaValdivieso, Ugyen Wangdi, Nurina Widagdo,Garry Wiseman, Akuila Yabaki, Nemo Yalo,Om Yentieng, Mohamed Zahid andZengke He.

Statistical WStatistical WStatistical WStatistical WStatistical Workorkorkorkork

The Statistical Team comprised RameshGampat, Niranjan Sarangi, RuwanthiSenarathne and Manoja Wickramarathne.The team benefited from comments providedby Amitabh Kundu, Omar Noman, T.Palanivel, Hafiz Pasha and AnuradhaRajivan.

ReviewersReviewersReviewersReviewersReviewers

The technical background papers as well asthe draft Report were peer reviewed inter-nally and externally at various stages by: GryBallestad, Nina Berg, Elena Borsatti, Asit K.Biswas, Edgardo Buscaglia, Jim Chalmers,C.P. Chandrasekhar, Yvonne Chua, PedroConceicao, Alison Drayton, Noha El-Mikawy,Bjoern Foerde, Ramesh Gampat, Aarti Gupta,Selim Jahan, Michael Johnston, MustafqKhan, Nalin Kinshor, Amitabh Kundu, Chris-tian Lemaire, Linda Lim, Sarah Lister, YiyiLu, Chune Loong Lum, Phil Matsheza, TobyMendel, Gerardo Munck, Donald O’Leary,William Orme, T. Palanivel, R.K. Raghavan,Anuradha Rajivan, Renata Rubian, NiranjanSarangi, Elissar Sarrouh, MuttukrishnaSarvananthan, Ruwanthi Senarathne, OmarSiddique, Thierry Soret, R. Sudarshan,Pauline Tamesis, Gopakumar K. Thampi,Chanuka Wattegama, Emma Webb,Cheng Wenhao, Manoja Wickramarathne,Alessandra Wilde, Rui Yang and Jon-SungYou.

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UNDP Country Offices andUNDP Country Offices andUNDP Country Offices andUNDP Country Offices andUNDP Country Offices andRegional CentresRegional CentresRegional CentresRegional CentresRegional Centres

UNDP Country Offices in Asia-Pacific haveprovided useful feedback. In this regard, wewould like to particularly thank the CountryOffices in Afghanistan, Bangladesh, Bhutan,Cambodia, China, Fiji, India, Indonesia,Islamic Republic of Iran, Lao PDR, Malaysia,Maldives, Mongolia, Nepal, Pakistan, PapuaNew Guinea, Philippines, Republic of Korea,Samoa, Sri Lanka, Thailand, Timor-Lesteand Viet Nam.

We would also like to express our thanksto the UNDP Regional Centre in Bangkok andthe UNDP Pacific Centre in Suva for theirfeedback.

AP-HDNet ContributorsAP-HDNet ContributorsAP-HDNet ContributorsAP-HDNet ContributorsAP-HDNet Contributors

Stimulating and focused discussions on theAP-HD Network were held from June toAugust 2007, which enriched the Report.The network discussions were moderated byJim Chalmers to whom we are very grateful.The contributors were: RamachandranRamasamy, Jens Christopher Andvig, GuitelleBaghdadi-Sabeti, Fayyaz Baqir, GernotBrodnig, Hasna Cheema, Kevin Evans, SergioFeld, Basil Fernando, Neil Fernando, RameshGampat, Sandy Gauntlett, Sonia Gomez, LiJing, Chitra Khati, Rokeya Khatun, BasantKumar Rath, Raj Kumar, Roy Laifungbam,Christian Lemaire, Peng Long Yun, JuanMayo, Ajit Mishra, Gerardo Munck, SteveOnwuasoanya, Pact Cambodia, BiswajitPadhi, Mark Philp, Thusitha Pilapitiya, Phil

Matsheza, Jon S.T. Quah, Anuradha Rajivan,Usaia Ratuvili, Charmaine Rodrigues, RenataRubian, Farhan Sabih, Rachada Sae-lee,Nabeel Salie, Niranjan Sarangi, NashidaSattar, Herman Semes, Gurpreet Singh,Andre Standing, R. Sudarshan, SumitraSundram, Bill Tod, Cecilia Tortajada, NgocAnh Tran, Taryn Vian, Frank Vogl, ChanukaWattegama, Andrew Wedeman, Rui Yang andDieter Zinnbauer.

ProductionProductionProductionProductionProduction

UNDP RCC Business Services Unit providedcritical administrative support and manage-ment services. We express our thanks toAnusuiya Ainkaran, Lakmini De Silva,Anula Harasgama, Harini Perera and TzvetanZafirov. Gayan Peiris from the UNDP RCCKnowledge Services Team configured the ITplatform that enabled us to rapidly store andtrack material relating to the Report.

Advocacy and DisseminationAdvocacy and DisseminationAdvocacy and DisseminationAdvocacy and DisseminationAdvocacy and Dissemination

Hasna Cheema, Ruwanthi Senarathne andBronwyn Walker with advice from theregional communications and advocacy teamof Cherie Hart and Surekha Subarwalhandled advocacy and dissemination for thisReport.

Omar NomanChief of Policies & Programmes

UNDP Regional Centre in Colombo

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Foreword vPreface viiAcknowledgements ixAbbreviations xix

OVERVIEW 1

CHAPTER 1: The Scourge of Corruption 15

What is Corruption? 18A Scourge through the Ages 22A Challenge for International Organizations 24Measuring the Problem 24Forms of Government 25Impact on People’s Lives 28Hampering Economic Performance 29Corroding Tax Administration 33Corruption and Human Development 35Contours of the Report 37

CHAPTER 2: Justice for Sale 39

Police Corruption 41Impact on the Poor 44Judicial Corruption 47Not for Sale 53

CHAPTER 3: Keeping Public Services Honest 55

Health Services 57Education Services 62Public Utilities 66The Right to Services 75

CHAPTER 4: Stopping Leakages in Financial and Material Aid 77

Emergency Responses 80Longer-Term Special Development Situations 81Social Safety Net Programmes 84Minimizing the Leaks 87

ContentsContentsContentsContentsContents

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CHAPTER 5: Cleaning up Natural Resources 89

The Extent of Corruption 93The Cross-Border Dimension 96The Impact on the Poorest 97Uprooting Corruption in Natural Resources 98Supporting the Environment 104

CHAPTER 6: Crushing Corruption from the Top 105

National Legislation and Anti-Corruption Agencies 107Civil Service Reform 113Curbing Corruption in Taxation 115Privatization 117The Right to Information 118e-Governance 123Cross-Border Cooperation 124Governments Taking the Lead 128

CHAPTER 7: Citizens on Watch 129

The Power of the Media 131Civil Society Organizations 137Keeping Up the Pressure 146

CHAPTER 8: Driving Out Corruption 147

The Turning Tide 150Seizing the Moment: Combining Pressure from Above with Voice from Below 150Setting the Priorities 151An Agenda for Action 152Taking the Higher Path 155

Notes 156

Bibliography 161

BOXES

1.1 Characteristics of Corruption 181.2 The Most Common Forms of Corruption 191.3 Virtuous Women, Corrupt Men? 201.4 Just Not Cricket 221.5 Country Vulnerability to Corruption 263.1 Counterfeit Drugs in Asia 583.2 Drug Experimentation 60

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3.3 Corruption in Private Schools in Bangladesh 643.4 Education as a Solution 653.5 Opportunities for Corruption Throughout the Project Cycle 673.6 Privatization: Mixed Results in Indonesia and the Philippines 703.7 Direct Action in Delhi 703.8 The Tortuous Process for Getting an Electricity Connection 713.9 Uprooting Corruption in Sanitation 744.1 Confronting the Double Whammy in Aceh 824.2 Sex for Food Scandals 834.3 Aid Watch in Sri Lanka 844.4 Corruption in Microfinance 855.1 What Makes Natural Resources Particularly Prone to Corruption? 915.2 Revenue Watch 996.1 ADB/OECD Anti-Corruption Initiative for Asia-Pacific 1256.2 The Pacific Plan’s Strategy to Fight Corruption 1267.1 An Envelope Headache in Indonesia and ATM Journalism in the Philippines 1367.2 What Civil Society Organizations Cannot Do – And Can Do 140

TABLES

2.1 Perceptions of Corruption in Justice System, by Global Region 413.1 Corruption in the Health Sector 573.2 Corruption in the Education Sector 634.1 Asia-Pacific Countries, by CCI Ranking and Experience of Crisis Situations 805.1 Some Forms of Corruption in Natural Resources 925.2 South-East Asia, Indicative Estimates of Illegal Logging 956.1 Main Anti-Corruption Agencies in Asia-Pacific Countries 1096.2 Appointment of Chief Executive of Some ACAs in the Asia-Pacific Region 1116.3 Staff and Budgets of Anti-Corruption Agencies, 2005 1116.4 Anti-Corruption Agencies: Some Examples of Focus 1126.5 Countries in Asia and the Pacific with Right-to-Information Legislation 1186.6 A Regional Snapshot of the UNCAC 1257.1 Media Ownership, Percentage of Countries 1337.2 Worldwide Press Freedom Index, Asia-Pacific Countries, 2007 1347.3 Incentives by Type and Target Constituency 142

FIGURES

1.1 Declining Trend in Corruption and Fraud, 1815–1975 231.2 Political Systems and Perceptions of Corruption 271.3 Political Systems in the Asia-Pacific Region 271.4 Systems of Government and Control of Corruption Index 281.5 Decentralization and Perceptions of Corruption 281.6 Political Systems, Perceptions of Corruption Across Different Sectors 291.7 Control of Corruption Index and GDP Growth 32

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1.8 Control of Corruption and Tax Revenue 341.9 Human Development Index and Perceived Level of Corruption 35

1.10 Change in Human Development Index and the Control of Corruption IndexAmong the Low- and Medium-HDI Countries 36

1.11 The Two-Way Relationship Between Corruption and Human Development 361.12 Perceived Level of Corruption and Secondary Enrolment 37

2.1 Respondents Who Have Paid a Bribe to the Police, by Global Region 433.1 Proportion of Users of Health Services Who Make Informal Payments,

Selected Countries 597.1 Voice and Accountability Plotted Against Corruption Control 1437.2 Institutional and Social Capacity Compared with Control of Corruption 143

SPECIAL CONTRIBUTIONS

Combating Corruption in Criminal Justice Agencies: The Indian Scene 45Prosecuting Corruption: A Pacific Perspective 50Strengthening Public Oversight Institutions in Bangladesh 116Solutions for Preventing and Curbing Corruption in China 121Fighting Corruption in Indonesia: From Where? 138

INDICATORS 181

Reader’s Guide and Notes to Tables 183

Popular Measures of Corruption

1 Popular Measures of Corruption 1892 Corruption (Perceptions) in Public Institutions, Media and NGOs 1913 Bribe Paying and Impact of Corruption (Perceptions) 193

Political Economy

4 Political Economy – Political Climate 1945 Political Economy – Governance Climate 1966 Political Economy – Voice and Choice, Legal Climate 1987 Political Economy – Economic Climate 199

Socio Economic Indicators

8 Human Development Index – Trends 2019 Demography 202

10 Macro Indicators: GDP, Trade and Tax 20411 Macro Indicators: Structure of the Economy 20612 Macro Indicators: Sectoral Distribution of Workforce and

Unemployment Rate 20813 Access to Improved Water Source and Sanitation Facilities 21014 Maternal and Child Health 21115 Incidence of Major Diseases 21216 School Enrolment 214

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17 Gender and Development 21518 Environmental Sustainability: Forest Area and Carbon Dioxide Emission 21719 Poverty, Inequality and Undernourishment 21920 Access to Information 221

Technical Notes

Technical note 1 Measuring Corruption 222Technical note 2 Mapping Vulnerability to Corruption 224

Definitions of Technical Terms 228

Statistical References 232

ACA Anti-Corruption Agency

ACC Anti Corruption Commission

ADB Asian Development Bank

ASEAN Association of South-East Asian Nations

BEEPS Business Environment and Enterprise Performance Survey

BRAC Bangladesh Rural Advancement Committee

CAC Commission Against Corruption (Macau)

CBI Central Bureau of Investigation (India)

CBO Community Based Organization

CCAGG Concerned Citizens of Abra Good Government (NGO-Philippines)

CCI Control of Corruption Index (World Bank)

CGAP Consultative Group to Assist the Poor (Consortium of Aid Agencies)

CIAA Commission for the Investigation of Abuse of Authority (Nepal)

CIDSS Comprehensive & Integrated Delivery of Social Services (Philippines)

CITES Convention on International Trade in Endangered Species

CPI Corruption Perception Index (Transparency International)

CPIB Corrupt Practices Investigation Bureau (Singapore)

CPLC Citizen Police Liaison Committee (Pakistan)

CSO Civil Society Organization

CSR Corporate Social Responsibilities

CVC Central Vigilance Commission (India)

DFID UK Department for International Development

EBRD European Bank for Reconstruction and Development

EU European Union

EIU Economist Intelligence Unit

ESI Environmental Sustainability Index

ESIA Environmental and Social Impact Assessment

EITI Extractive Industries Transparency Initiative (Regional Initiative)

FAO Food and Agriculture Organization of the United Nations

FATF Financial Action Task Force on Money Laundering (Founded by G7)

FDI Foreign Direct Investment

FIIA Foreign Investment Implementation Authority (India)

FLEG Forest Law Enforcement and Governance (East Asia Ministerial Conference,2001)

AbbrAbbrAbbrAbbrAbbreviationseviationseviationseviationseviations

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FSC Forest Stewardship Council

GCR Global Competitiveness Report

GDP Gross Domestic Product

GONGOS Government Sponsored NGOs

HDI Human Development Index

HIV/AIDS Human Immunodeficiency Virus/Acquired Immunodeficiency Syndrome

ICAC Independent Commission Against Corruption (Hong Kong)

ICC International Cricket Council

ICRG International Country Risk Guide

ICT Information and Communication Technology

ICW Indonesia Corruption Watch

IFI International Financial Institution

ILO International Labour Organization

IT Information Technology

IUU Illegal Unreported and Unregulated

KDNG Kachin Development Network Group (Myanmar)

KICAC Korea Independent Commission Against Corruption

KPK Komisi Pembarantasan Korupsi (Indonesian Corruption EradicationCommission)

LGRDD Local Government and Rural Development Department (Pakistan)

LRA Load Regularization Agreement

MDG Millennium Development Goal

MDI Micro Finance Institutions

MKSS Mazdoor Kisaan Shakti Sangathan (Indian NGO)

MSC Marine Stewardship Council

NBI National Bureau of Investigation (Malaysia)

NCCC National Counter Corruption Commission (Thailand)

NGO Non-Governmental Organization

NIS National Integrity Strategy (Bangladesh)

NJPMC National Judicial Policy Making Committee (Pakistan)

NLCGG Northern Luzon Coalition for Good Governance (Philippines)

NRB National Reconstruction Bureau (Pakistan)

NREGA National Rural Employment Guarantee Act (India)

OC Ombudsman Commission (PNG)

ODA Official Development Assistance

OECD Organization for Economic Development and Cooperation

ONA Office of National The Assembly (Vietnam)

OPEN Online Procedure Enhancement for Civil Applications (Republic of Korea)

PAP People’s Action Party (Singapore)

xxxxxxxxxx

PBS Pally Bidyut Samities (Bangladesh-Rural Electrification Board)

PCIJ Philippine Centre for Investigative Journalism

PES Payment for Environmental Services

PMT Pole Mounted Transformer

PPP Public Private Partnership

PSC Public Service Commission (Bangladesh)

PWYP Publish What You Pay (Campaign launched in 2002 by Civil Societies)

RAS Rapid Alert System (WHO)

RRC Regulatory Reform Committee (Republic of Korea)

RFD Regional Forestry Division (Thailand)

RTI Right To Information (India)

RWI Revenue Watch International

SAARC South Asian Association for Regional Cooperation

SEUF Socio Economic Units Foundation (India-NGO)

SFDA State Food and Drug Administration (China)

StAR Stolen Asset Recovery (Initiative launched by World Bank and UNDOC)

SWC Single Window Cell (India)

TAF The Asia Foundation

TAG Transparent Accountable Governance (NGO-Philippines)

TI Transparency International

TAN Transparency and Accountability Network (Philippines)

UNCAC United Nations Convention Against Corruption

UNDP United Nations Development Programme

UNESCAP United Nations Economic and Social Commission for Asia and Pacific

UNODC United Nations Office on Drugs and Crime

UNEP United Nations Environment Programme

UNESCO United Nations Educational Scientific and Cultural Organization

UNFCC United Nations Framework Convention on Climate Change

USAID United States Agency for International Development

VA Village Accountants

VAT Value Added Tax

WHO World Health Organization

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TACKLING CORRUPTION, TRANSFORMING LIVES: OVERVIEWTACKLING CORRUPTION, TRANSFORMING LIVES: OVERVIEWTACKLING CORRUPTION, TRANSFORMING LIVES: OVERVIEWTACKLING CORRUPTION, TRANSFORMING LIVES: OVERVIEWTACKLING CORRUPTION, TRANSFORMING LIVES: OVERVIEW 11111

Corruption has many damaging effects:weakened national institutions, inequitablesocial services, and blatant injustice in thecourts – along with widespread economicinefficiency and unchecked environmentalexploitation. And it hits hardest at the poor– who often depend heavily on public servicesand the natural environment and are leastable to pay bribes for essential services thatshould be theirs by right.

Politicians in the region are starting torespond. Nowadays most want to be asso-ciated with fighting corruption. Indeed theneed to combat corruption has been used as ajustification for overthrowing elected govern-ments, sometimes even with an element ofpublic support. Civil society groups too aremaking greater efforts to hold public- andprivate-sector organizations to account, andthe media are also focusing on this issue andfinding new ways to expose and publicize it.

There is also greater commitment at theinternational level. By the end of 2007, 140state parties had signed the first global anti-corruption instrument, the 2005 UnitedNations Convention Against Corruption. It

People across the Asia-Pacific region are becoming increasingly concerned about corruption, andgovernments are starting to react. Hauling the rich and powerful before the courts may grab theheadlines, but the poor will benefit more from efforts to eliminate the corruption that plaguestheir everyday lives. Corruption has to be tackled from the top down and from the bottom up,with vigorous support from the media and organizations of civil society. An internationalresponse is needed to counter cross-border corruption in this increasingly globalized worldas well.

requires acceding and ratifying countries toimplement far-reaching reforms.

Corruption is an important developmentissue – developing countries do not want tofollow the slow historical path of the nowdeveloped countries, for corruption to bebetter controlled. Just as they are putting inplace conscious policies for poverty reduction,so too they would like to speed-up the processof tackling corruption.

A Historical ProblemA Historical ProblemA Historical ProblemA Historical ProblemA Historical Problem

Corruption has plagued the world ever sincethe emergence of organized forms of govern-ment as people organized themselves forgroup living. Until the nineteenth and earlytwentieth centuries, many of the now deve-loped countries were riddled with corruptionand it took many decades to bring the levelsdown. Governments across the Asia-Pacificregion have also been preoccupied with thisissue. Some countries, Singapore and HongKong (SAR), China, for example, have managedto reduce corruption much more swiftly butmost other countries in the Asia-Pacific have

TTTTTackling Corruption, Tackling Corruption, Tackling Corruption, Tackling Corruption, Tackling Corruption, Transforming Livransforming Livransforming Livransforming Livransforming Liveseseseses

OvOvOvOvOverviewerviewerviewerviewerview

ASIA-PACIFIC HUMAN DEVELOPMENT REPORTASIA-PACIFIC HUMAN DEVELOPMENT REPORTASIA-PACIFIC HUMAN DEVELOPMENT REPORTASIA-PACIFIC HUMAN DEVELOPMENT REPORTASIA-PACIFIC HUMAN DEVELOPMENT REPORT22222

generally made slow progress – they are largerterritories and their leadership has provedless resolute.

Across the region, corruption comes inmany forms, but the commonest overalldistinction is between ‘grand’ and ‘petty’.Grand corruption typically involves relativelylarge bribes from contractors or othercorporations, generally associated with high-level politicians or officials. Petty corruptioninvolves smaller amounts but more frequenttransactions – lower-level public officialsdemanding ‘speed money’ to issue licenses, forexample, or to allow full access to schools,hospitals or public utilities. It tends to affectthe daily lives of a very large number ofpeople, and more so the poor, and hencecalling it ‘petty’ is really a misnomer.

Though corruption is widespread it islargely clandestine, and thus difficult tomeasure. Most attempts have been indirect –gauging people’s perceptions rather thanactual transactions of corruption. One of themost widely cited is the ‘Corruption Percep-tions Index’ (CPI) produced by the NGOTransparency International. Another is the‘Control of Corruption Index’ (CCI) producedby the World Bank. They do offer somerelevant information and have spurredcountries into responding. They can also beuseful for cross-regional comparisons – forwhich this Report uses the CCI. However,since these measures are opinion-based theyare necessarily imprecise. The measurementsare generally oriented towards businesses andmake less of an attempt to express the impacton the poor.

Political and Economic ImpactPolitical and Economic ImpactPolitical and Economic ImpactPolitical and Economic ImpactPolitical and Economic Impact

All forms of government are vulnerable tocorruption, but some are more vulnerablethan others. On the whole, corruption seemslower in democracies than authoritarian

regimes, and lower within parliamentarythan presidential systems. Although indemocracies there is always the danger thatelected politicians will become beholden towealthy donors, citizens can always ‘vote therascals out’.

Within all forms of government, someinstitutions are generally worse than others.In the Asia-Pacific region the least trusted arethe police, followed by the judiciary and taxoffices. Education and medical services comenext, while the least corrupt sectors areutilities and registry or permit services –although even in these, levels of corruptionare still very high.

Corruption inevitably has an impact onthe economy and the society. It is sometimesargued that by ‘greasing the wheels’ corrup-tion speeds things up. But there is little evi-dence for this from the aggregate standpoint;indeed it seems more likely if businessesreadily pay bribes they will simply encouragebureaucrats to unreel yet more red tape.

On the other hand, there are many waysin which corruption is likely to hampergrowth especially over the long term – forexample, if talented people are tempted tomake an easy living as corrupt bureaucratsrather than as entrepreneurs. Even those whodo run businesses, may prefer to remain inthe informal sector rather than expand andbe faced with greater demands from corruptofficialdom. Corruption is also likely toweaken infrastructure; not only does it drainaway funds, it also reduces the quality ofinvestment, producing inadequate transport,power, or communications systems.

Corruption distorts both the nationaleconomy and public investment through thetax system. When governments apply hightax rates, with complex rules that are inter-preted by underpaid officials they can expectto lose a lot of tax income – particularly ifthere is little risk of being caught or punished.


This, in turn, could reduce the capacity ofgovernment to provide quality public services.

A number of studies have indeedsuggested that extensive corruption isassociated with lower levels of growth –though the correlation is weaker in Asia thanelsewhere. Generally it does less damage inlarger countries, perhaps because investorsmay be willing to tolerate a more difficultworking environment if they can recoup theirlosses in large consumer markets. Anotherfactor is the way in which corruption isorganized: usually it is less harmful if it ispredictable, when, for example, a strong butcorrupt ruler demands for himself and hisentourage a standard percentage on all majoractivities and works with a long time horizon,delivering at least some benefits to bribepayers.

Corruption and Human DevelopmentCorruption and Human DevelopmentCorruption and Human DevelopmentCorruption and Human DevelopmentCorruption and Human Development

Corruption undermines human development.This can happen through various channels. Itis likely, for example, to corrode ideals ofpublic service, so that corrupt administra-tions will tend to be less interested ininvesting in health and education. Even if theywish to, they will find that their activitieshave hampered economic growth andweakened tax collection, leaving them less tospend on public service programmes.

Corruption also affects the quality andcomposition of public investment. Corruptofficials are less attracted to small-scaleprojects that involve a large number of actors,preferring large infrastructure projects thatoffer greater opportunities for collectingrents. This distorts the pattern of publicexpenditure – away from key public goodssuch as public health, education andenvironmental protection, and towards newroads or airports or military hardware.

Corruption is also likely to undermine

efforts at poverty reduction – by divertinggoods and services targeted for the poor towell-off and well-connected households whocan afford to bribe officials. The poor also loseout when they have to pay bribes, since theycan only afford small amounts, whichrepresent a high proportion of their income.

In turn, better human development condi-tions – wider-spread education, an informedcitizenry with voice to influence decisionmakers in government and businesses – canhelp combat corruption.

Justice for SaleJustice for SaleJustice for SaleJustice for SaleJustice for Sale

In the Asia-Pacific region, corruption is oftenat its worst in law enforcement, seriouslyundermining justice. Many police officers arehonest and conscientious, but others have adifferent agenda; rather than serving asguarantors of rights and protection they aresources of harassment and fear. In the ruralareas, they may, for example, be in thepockets of rich landowners who use them tocontrol their workforces or their tenants. Inthe cities, the police can be in the pay ofcorrupt politicians and business interests, andmay be used, for example, to force poorpeople off their land to make way for newdevelopments. Or police officers may simplybe working for themselves, extracting asmuch income as they can from their positionof power. Poor salaries and working condi-tions among the lower constabulary arecontributory factors.

Police corruption is especially pernicioussince it is often accompanied by violence.Police may, after apprehending suspects,choose not to arrest them but instead beatthem up or rape them, and force them to payfor their freedom. Police can also seizepeople they know to be innocent, threateningthem with arrest and demanding paymentfor release. A survey in the Asia-Pacific


region found that over the previous year,18 per cent of respondents had paid apolice bribe.

The poor are the most exposed becausethey lack the funds or influence needed todefend themselves. In cities, among thoselikely to be harassed are street vendors, whohave to pay up or see their goods confiscatedor destroyed. On the other hand, poor peopleare less likely to receive any attention if theywant to register a complaint.

For tackling police corruption, one of themost important steps is to ensure that com-plaints against the police are dealt with, by atruly independent body. Other solutionsinvolve changing police structures and opera-tions to make them more efficient andresponsive – applying rigid recruitmentcriteria, reallocating individuals across tasks,modifying transfer patterns, and carrying outethical evaluations of those who are up forpromotion. The overall intention should be tocreate more professional forces that enableindividual officers to take greater pride intheir work.

People tend to have fewer interactionswith the court system. But here too they mayfind that justice has its price. A number ofstudies across Asia have found that two-thirds or more of the population consider theroutine court system to be corrupt, and admitthat they themselves, guilty or innocent, willconsider it wise to pay bribes. The poor willsuffer from a corrupt legal system that offersthem little protection – exposing them toarbitrary judgements that may cause them tolose their land, homes, or livelihoods.

Judicial corruption is another aspect of aweakly functioning state. In many countries,judges are appointed or promoted bypolitically motivated bodies and even judgeswho want to uphold ethical principles mayfind themselves subject to heavy politicalpressure in high-profile cases. Low salaries

make it tempting for weak judges to buckle toother pressures too. Some may, for example,consider it more important to support arelative or associate than to uphold the ruleof law. They may also fear retribution.

Much of the responsibility for reducingjudicial corruption lies with the judges andlawyers – acting individually and throughassociations or professional bodies. Butgovernments can also minimize judicialcorruption. They can, for example, ensurethat judges are appointed by independentbodies, serve fixed terms, have salaries thatmatch their experience and qualifications,and are offered all necessary protection. Thejudicial system should also require judges togive written reasons for their judgements –making greater use of information technologyto offer easier access to court documents.

Keeping Public Services HonestKeeping Public Services HonestKeeping Public Services HonestKeeping Public Services HonestKeeping Public Services Honest

Corruption is also widespread in socialservices such as health and education, as wellas in public utilities that provide electricityand water. As a result, poor people findthemselves excluded from schools or hospitalsthat they cannot afford, or asked to pay extrasimply to gain access to services to which theyalready have a right.

Health ServicesHealth ServicesHealth ServicesHealth ServicesHealth Services

Corruption can occur within health servicesat all levels – from grand corruption, as fundsare siphoned off during the construction ofnew hospitals or health centres, to pettycorruption as health workers or administra-tors demand bribes just to perform theirroutine duties. Corruption can also takevarious forms within health service staffing.This may involve, for example, buyingpositions at the time of hiring, or excessiveabsenteeism: across the region reported


absenteeism rates cluster around 35 per centto 40 per cent. Corruption also creeps in viathe pharmaceuticals business – at all stagesof drug development and supply. For the drugcompanies, one of the main priorities is toensure that their products are prescribed, sothey are profligate with generous ‘perks’ fordoctors.

One might expect corruption to result inpoorer standards of health. Some cross-national studies have indeed suggested thatin countries where levels of corruption arehigher immunization rates are lower andlevels of child mortality are higher.

Reducing corruption in health and othergovernment services will require action frombelow and above. From below, users can worktogether to resist demands for bribes. InIndia, teams of semi-literate rural peopleworking as amateur reporters have exposeddoctors illegally charging for delivering babiesat a community health centre. From above,governments will need to ensure more trans-parent and better managed services. In theMekong sub-region, for example, the regula-tory authorities have been improving commu-nications and cooperation across borders, sothey have been able to notify each other of thecirculation of fake drugs and remove themmore quickly.

EducationEducationEducationEducationEducation

Corruption is also widespread in educationsystems. This can start in the procurement ofmaterial and labour for school construction,as corrupt officials siphon off funds forschool buildings – which can increase costsbetween two and eight times. There can alsobe corruption in the purchase of textbooks,desks, blackboards, and other supplies, aswell as in contracts for cleaning services andmeals. In many countries, there areirregularities in the hiring of teachers, which

in the most extreme form, results in therecruitment of ‘ghost teachers’ or even in thecreation of entire ‘ghost institutions’ – withthe allocated salaries and other expenseschannelled into the pockets of officials. Justas families may need to pay bribes to get intohospitals, they may also have to pay extra toget their children into schools.

If governments do not address theseproblems, schools will continue to transmit aculture of corruption to succeeding genera-tions. The main priority should be closersupervision, especially by allowing commu-nities more control over schools throughparent-teacher associations and other localorganizations. In the Philippines, for example,a range of civil society groups, from NGOs tochurches to Girl and Boy Scout groups, havecome together to monitor the delivery ofschool books. In India, one NGO usescameras to register the attendance of teachersby taking digital photos that record the dateand time.

Public UtilitiesPublic UtilitiesPublic UtilitiesPublic UtilitiesPublic Utilities

For electricity and water supplies, across theregion the standard kickback for infrastruc-ture projects is often quoted as 10 per cent ofthe value of the contract. Corrupt officialsregularly demand bribes to accept bids or toapprove the completion of the work. Butconstruction companies themselves often takethe initiative – colluding with officials orother bidders.

Once the systems are in place, corruptioncontinues in day-to-day operations. Sincewater supplies and sanitation and electricitysupplies are generally delivered by monopolyproviders, officials can take advantage of thefact that consumers have nowhere else toturn. Staff might, for example, supplementtheir salaries by colluding with clients toprovide services ‘informally’ – by carrying out


repairs for side-payments, falsifying meterreadings, or making illegal connections. Theensuing losses can be huge: it has beenestimated that, if corruption in watersupplies were eliminated, 20 per cent to70 per cent of resources could be saved.

But the most damaging effect is on thelives of poor people through high prices. Asone consumer said to a researcher for thisReport: ‘It is really tough for a day labourerto pay a high price for electricity and water.You know it is not possible to get electricityand water connections without bribes or extramoney. So our budget is strained and wecannot afford to meet our needs. We cannotsave anything for our future either.’ Otherssaid that they had been deprived of basicfoodstuffs and medical facilities, incurredbusiness losses, and interrupted theirchildren’s education because they had tospend money on bribes.

Many of the strategies for uprootingcorruption involve greater investment inservices, to minimize the shortages thatencourage people to pay bribes. Public corpo-rations will also need to improve standardsof management and operate in a more trans-parent fashion. But consumers too can takedirect action to get better services. InBangladesh, for example, the board of ruralelectric cooperatives is selected by consumerswho then negotiate an agreement thatincludes targets for system losses, collectionefficiency, and the cost of supply per kilo-metre of line. They also hire meter readers onfixed contracts – after that they have to seekdifferent careers. Another example comesfrom the Local Government and Rural Deve-lopment Department in Azad Jammu andKashmir which has largely eliminated the useof private contractors. Instead, its technicalstaff work with community members whothemselves provide labour and organize thepurchase of supplies – limiting the opportu-nities for ‘cream skimming’ and collusion.

Stopping LeakagStopping LeakagStopping LeakagStopping LeakagStopping Leakages in Fes in Fes in Fes in Fes in Financialinancialinancialinancialinancialand Material Aidand Material Aidand Material Aidand Material Aidand Material Aid

Emergencies such as conflict, natural dis-asters, or sudden changes in political configu-ration – ‘special development situations’ –often show human beings at their best.Nevertheless, there are also people who takeadvantage of opportunities to enrich them-selves at a time when large amounts of cashand goods have to be transferred rapidly withfew administrative controls.

To some extent, corruption can even leadto emergencies. Corruption tends to break thetrust between the governing and the governed,as well as sow dissension among communitiesthat can degenerate into destructive or violentconflict. Corruption can even exacerbate theimpact of natural disasters, such as earth-quakes, if it leads to uncontrolled develop-ment and compromises building inspectionpractices. The links between corruption anddisasters are even clearer with landslides thatresult from illegal logging.

When responding to emergencies, aidagencies are under pressure to spend fast, andmove quickly with flagship projects in anunfamiliar environment and have to relax orset aside normal procedures – which maycause damage in terms of community practiceand expectation.

Many of the same issues arise with longer-term processes in the aftermath of conflict.In this case, there is a temptation to buy atemporary peace by allowing antagonisticgroups to share out the spoils. This is dange-rous since it allows corrupt elites to entrenchthemselves in politics and set up predatoryschemes that later will be very difficult toeliminate.

As elsewhere, corruption in specialdevelopment situations needs to be addressedthrough greater transparency in governanceand closer monitoring. But there are also morespecific measures. One is for agencies to


reduce the pressure to spend ‘fast andfurious’ by operating with more rationaldeadlines; and rather than aiming at unrea-listic fiduciary standards, they should try toensure that their activities and the prices theypay are ‘reasonable’ under the circumstances.When responding to natural disasters theycan also establish long-term contracts withprime international contractors – who shouldbe required to engage and build the capacityof local businesses. In addition, governmentsand aid agencies also need to work closelywith local NGOs and establish effectivesystems for dealing with complaints.

Social Safety Net ProgrammesSocial Safety Net ProgrammesSocial Safety Net ProgrammesSocial Safety Net ProgrammesSocial Safety Net Programmes

Social safety net programmes are an impor-tant part of anti-poverty programmes butthey are also vulnerable to corruption. Thoseorganizing the schemes may, for example,demand payments to register the names ofrecipients, or they can also enrol non-existentworkers or falsify the number of hoursworked or underpay workers or give themless food or materials than they are entitledto. Contractors who are supposed to be sellingsubsidized grains for the poor, sometimes sellmuch of this on the open market at inflatedprices.

Government have tried to reduce theseleakages with more targeted programmes, buteven these are susceptible to corruptionduring the selection of beneficiaries. Analternative form of targeting is to encourage‘self-selection’; for example, by offering workor wages that only the very poor will accept.Similarly, for food distribution, rather thandistributing expensive grains, such as highlyprocessed rice and wheat, safety netprogrammes can distribute cheaper butnutritious staples such as sorghum.

A number of countries have alsoimproved the efficiency of such schemes by

ensuring greater community control andsocial audits. To be sustainable, however,community-driven approaches have to bebacked by a strong legal framework andbureaucratic support.

Cleaning Up Natural ResourcesCleaning Up Natural ResourcesCleaning Up Natural ResourcesCleaning Up Natural ResourcesCleaning Up Natural Resources

Many developing countries in the Asia-Pacificregion are rich in natural resources, but,thanks to corruption, much of this nationalwealth is being drained away. Companiesmay bribe public officials to get permits forcutting timber, for example, or they may payto get away with logging in protected areas.Public officials themselves can also join in byrunning their own ‘off-the- book’ businesses.Similar problems arise with mineral extrac-tion or unregulated fishing, and with systemsof land registration and administration, orthe capturing of protected species.

Given the size of potential profits,corruption can be on a grand scale, indeedfrequently amounting to ‘state capture’, asprivate companies pay public officials toshape laws, policies, and regulations to theiradvantage. State capture can, however, alsobe achieved through legal routes – by intensepolitical lobbying, for example, or by makingdonations to political parties.

Corruption in the management of naturalresources is particularly damaging for thepoorest communities. Many farmers havebeen driven into poverty as a result of illegalland expropriations or have been deniedaccess to irrigation water. Whole communi-ties, particularly indigenous people, sufferfrom the exhaustion of many natural re-sources, notably primary forests and inshorefishing grounds.

Experience across the region suggests anumber of ways of addressing theseproblems. One is to ensure that new projectsare subjected to environmental and social


impact assessments, followed by open publichearings. Another is to decentralize naturalresource management – to allow local peopleto use resources sustainably, giving them alsoa greater incentive to control and protect theseresources. At the same time, since exploita-tion of natural resources often takes place inremote regions, governments and interna-tional organizations can support them withsatellite monitoring technologies.

Given the highly cross-border nature ofthe problem, it is vital to achieve internationalcooperation. Extraction processes are capitalintensive and often involve large multina-tional companies that can be susceptible tointernational pressure – especially if govern-ments insist that their financial transactionsare open to public scrutiny. Unfortunately,many of the errant multinationals are basedin Asian countries that have shown littleinterest in policing their companies abroad.

Since natural resource corruption isdriven largely by governance failings, it willbe important to strengthen state capacitygenerally. But there are also some specificoptions for agencies concerned with naturalresources, such as separating functions formanaging production from those for monitor-ing and conservation.

The most extreme solution for limitingthe effect of public corruption is privatiza-tion. However, this may only shift the powerfrom one corruptor to another. The aiminstead should be to establish a clear andtransparent regulatory framework for rightsto natural resources, whether held publiclyor privately.

This has to be a combination of nationaland international action. Most of the corruptactivity would be much less profitablewithout ready markets in richer countries foroil or metals or agricultural products. Moreeffective monitoring and control bygovernment and local communities will

therefore need to be matched by internationalcampaigns that reject goods produced bycorrupt and exploitative individuals andcompanies.

Crushing Corruption frCrushing Corruption frCrushing Corruption frCrushing Corruption frCrushing Corruption from the Tom the Tom the Tom the Tom the Topopopopop

If countries are to tackle corruption they willneed to address the issue at all levels of govern-ment as well as in the private sector – reform-ing institutions and processes so as to reducethe opportunities for corruption while creat-ing effective systems for detecting malpracticeand punishing offenders.

One of the most basic anti-corruptionmeasures is to ensure that corrupt activitiesare outlawed – either as part of general legisla-tion or laws against specific forms of corrup-tion. Legislation can also cover such issues asmoney-laundering; a public procurement codeof ethics should also be in place. It is alsoimportant to provide legal protection for‘whistle-blowers’.

Anti-Corruption AgAnti-Corruption AgAnti-Corruption AgAnti-Corruption AgAnti-Corruption Agenciesenciesenciesenciesencies

Governments may divide anti-corruption res-ponsibilities between various prevention andlaw enforcement institutions. Most countriesin the region have established formal anti-corruption agencies (ACAs) of one form oranother. Unfortunately, these agencies areoften quite weak. Almost all these ACAsdepend on government funding and severalface severe budget constraints. Anotherimportant factor is where the ACA is locatedin government: if it reports to the office of theprime minister, for example, it can be used asa weapon against political opponents. In theAsia-Pacific region, the experience has beenmixed. Some administrations, such as thosein Singapore and Hong Kong (SAR), Chinahave resisted the temptation to meddle;others have not. Another important issue is


independence from the police; otherwise acorrupt police force may be free to investigateits own members.

Whether a country has one or manyagencies, success in the fight against corrup-tion depends to a great extent on cooperationfrom other parts of government. Unfortu-nately, this is rarely forthcoming and agenciesare regularly frustrated by their inability tosecure information and prosecutions. In thehands of a clean government, an ACA can bean asset. But since it can also be deployed as apolitical weapon, such an agency should notbe created until there is a sufficient politicalconsensus on an anti-corruption strategy.

Civil Service ReformCivil Service ReformCivil Service ReformCivil Service ReformCivil Service Reform

Attempts to reduce corruption withingovernment will require civil service reform –reducing the incentives and opportunities forcorrupt behaviour among public servants,while increasing their anxieties about beingcaught and punished. For this purpose, one ofthe first priorities should be to base personnelpolicies entirely on merit. Some countries inAsia had merit-based policies in the past buthave not maintained this tradition and makemany appointments on the basis of favouri-tism. Another option is to raise salaries,reducing the gap between those in the publicand private sectors. Although this is unlikelyto reduce grand corruption, which is causedless by need than by greed, it can reduce need-based and more retail corruption.

Governments will, however, need tosupplement salary increases and merit-basedpromotions with tighter systems of monitor-ing and control that can detect corruptionswiftly and punish it severely. This shouldalter the mindsets of civil servants so thatthey see bribery and corruption not as ‘low-risk, high-reward’ activities but as ‘high-risk,low reward’ ones.

Another issue is red tape, which slowsprocedures and forces users to join queuesthat can only be jumped by paying bribes.Most tax-related corruption, for example,flourishes within excessive red tape whichrequires frequent interactions betweentaxpayers and tax officials. This can betackled by keeping rates moderate so as notto discourage potential taxpayers whilecreating an integrated, simple and rationalsystem. This would allow tax departments tomake the best use of information technologywhich limits the discretionary powers of taxofficials while also cutting transaction costs,helping to increase transparency and buildtrust.

Finally, the acid test of an anti-corruptionstrategy is the determination to catch the ‘bigfish’. Prosecuting and punishing the rich andfamous, enhance the credibility of the strategyand has the added advantage of deterringothers, especially junior civil servants.

PrivatizationPrivatizationPrivatizationPrivatizationPrivatization

In addition to reforming public services,governments can also consider privatizing oroutsourcing some of them. This does notnecessarily solve the problem since corruptionis also rife in the private sector, so govern-ments need to be concerned not just withwhether services should be privatized buthow. If policy is weak before privatization, itwill also be weak after privatization. Analternative is to create public-private partner-ships. So far these have had mixed results;they seem to have worked better on a smallerscale.

The Right to InformationThe Right to InformationThe Right to InformationThe Right to InformationThe Right to Informationand e-Governanceand e-Governanceand e-Governanceand e-Governanceand e-Governance

People now believe they have a right to seehow government works and what it is doing.


In response, eight Asia-Pacific countries,including China and India, now have right toinformation (RTI) legislation. This defineskey categories of information that all publicbodies are required to publish, and establishescitizens’ rights to receive specific informationon request. Legislation is, however, only thefirst step. The highest levels of governmentalso have to sustain their support of RTI andpublic officials have to engage positively andmeet their obligations fulsomely, so it isimportant that officials are engaged from theoutset, and understand not only theirobligations, but also the benefits they canderive.

One development that should permittransparency and the right to information isthe introduction of information andcommunications technology (ICT) and theextension of e-governance. Governments andservice providers can use new technology tobecome more accountable and responsive. InIndia, for example, the Central VigilanceCommission uses its website to publish thenames of officers against whom corruptioninvestigations have been ordered or on whompenalties have been imposed.

But there are dangers. Governments mayalso use new technology to exercise greatercontrol over their citizens. Corrupt officialstoo may also be able to exploit such systemsto their own advantage. Many governmentshave placed the development of nationale-governance plans in the hands of IT staff.Since they may not be very familiar withcorruption issues, they need therefore towork with legal and anti-corruption experts.

Cross-Border CooperationCross-Border CooperationCross-Border CooperationCross-Border CooperationCross-Border Cooperation

In an increasingly integrated global economy,corruption has become a cross-border issue.Countering corruption will need,therefore,cooperation between governments, inter-

national agencies and international corpora-tions. The most important step in this hasbeen the United Nations Convention AgainstCorruption (UNCAC). Thus far, while 19Asia-Pacific countries have signed the treaty,only 10 have ratified or acceded to it.

One of the aims of cross-border coopera-tion is to control transnational corporations(TNCs) – which generally operate moreresponsibly in developed countries where theyare under closer scrutiny. While many TNCshave developed their own codes of conduct, anumber of international agencies and civilsociety organizations have also establishedguidelines.

For developing countries, one of the mainproblems is that the proceeds of corruptionare laundered through offshore banks and taxhavens, outside of Asia Pacific and within.As a response to this, and to help developingnations recover assets stolen by corruptleaders, UNDOC and the World Bank in2007 launched the Stolen Asset Recovery(StAR) initiative.

Citizens on WCitizens on WCitizens on WCitizens on WCitizens on Watchatchatchatchatch

Tackling corruption is not a job for govern-ments alone. Civil society too must play itspart – by monitoring and reporting on stan-dards of government and also by refusing topay bribes or collude with corrupt officials.Individuals, civil society organizations andthe media need to stay alert, demanding thehighest ethical standards and resolving toreject corruption wherever it appears.

The Power of the MediaThe Power of the MediaThe Power of the MediaThe Power of the MediaThe Power of the Media

One of the principal watchdogs monitoringand exposing corruption should be the media– press, radio and TV. When the conventionalmedia are too timid, those with vital informa-tion on corruption can now use the internet.


The media can serve many important func-tions, not just exposing corruption but alsosustaining an open and transparent flow ofinformation and fostering a climate of opinionthat is increasingly intolerant of corruption.

Publicity can be particularly effectiveagainst extortion, which victims may bewilling to report to the press. Another type ofcorruption that the press can expose iscollusion; neither bureaucrats nor theirclients have any inceptive to expose themalfeasance, but journalists do – motivatedeither by their professional ethos or theprospect of a good story. As well as exposingindividual cases, investigative journalism canlead to more profound reforms – uncoveringserious systemic flaws and catalysing publicdiscussion and debate.

The press and other media will, however,only be able to report on corruption if theyare free to do so. They face two main types ofconstraint: the first comes from governmentcensorship; the second comes fromproprietors since the private media oftenserve the interests of wealthy individuals orcorporations who also may be corrupt. Inaddition, there can be constraints of capacitysince journalists often lack the skills fortextured and in-depth reporting.

The media can promote good governanceif news organizations enjoy editorial indepen-dence, abide by high ethical and professionalstandards and know that their rights will beguaranteed. Clearly, however, a free press isnot enough. Corruption is rife even in coun-tries with long traditions of press freedom.These countries also need clean and efficientsystems of justice that will follow up onwidely-reported allegations.

There have been many examples acrossthe region, of action by national andcommunity-based media. In Nepal, forexample, the Civil Society Anti-corruptionProject uses local radio listener clubs and

other civil society organizations to encourageanti-corruption activities. In Papua NewGuinea, Transparency International, theOmbudsman Commission and the MediaCouncil run a hotline, through whichmembers of the public can report suspectedcases directly to the media.

Even when the media are not launchinginvestigations, they can still play a vital rolethrough their normal functions. By reportingregularly on the activities of public anti-corruption bodies, the media reinforce theirposition. By persistently snapping at theheels of public officials, a lively press helpssustain a democratic system and discouragespeople tempted to engage in corrupt practices.

Civil Society OrganizationsCivil Society OrganizationsCivil Society OrganizationsCivil Society OrganizationsCivil Society Organizations

While the media can prepare the ground,accountable government has to be sustainedby citizens themselves, partly through theballot box but also through civil societyorganizations (CSOs). What sort of relation-ship should CSOs have with local regimes:contentious or cooperative? To some extent,the answer depends upon the availablepolitical options, and upon the state of civilliberties and rule of law. CSOs must be forth-right about opposing corruption, but wherepossible they should seek cooperative relation-ships with the regime, giving governmentofficials incentives to oppose corruption, andhelping them develop the means to do so.However, they should avoid becoming investi-gative bodies, whistle-blowers, or forces ofanti-corruption vigilantes – which is unlikelyto be welcomed by political leaders. Norshould they offer ethical ‘seals of approval’ toleaders, parties, agencies or private interests.

The Asia-Pacific region has a variety oforganizations, which are active in the anti-corruption field. Some have a global focus,others a regional base. Their greatest


example, politicians who can claim credit forrooting out corruption from sectors like wateror electricity, health or education, will derivefresh sources of legitimacy from a gratefulelectorate. Businesses that align themselveswith higher standards of corporate gover-nance can devote their energies to boostingtheir own growth and profits legitimately,rather than seeing their investment fundsleech away unproductively into the pocketsof corrupt officials.

Setting the PrioritiesSetting the PrioritiesSetting the PrioritiesSetting the PrioritiesSetting the Priorities

Addressing corruption can be a dauntingproposition. It may be better therefore tofocus initially on a few specific areas.

The Report has identified three areas toconsider – the police, social services, andnatural resources. Naturally specific priori-ties will depend very much on nationalcircumstances. From a human developmentperspective, however one priority is clear:governments should be seeking ways ofreducing the forms of corruption that hit thepoor the hardest – in health and educationservices, for example. Another priorityshould be to root out corruption within policeforces and the justice system since this canpave the way for dealing with corruptionelsewhere. With the growing internationalrecognition on degradation of the environ-ment and climate change, there is little timeto lose in preserving our natural resources.These need prioritized attention before it istoo late, especially where this is the backboneof livelihood for the poor.

An AgAn AgAn AgAn AgAn Agenda for Actionenda for Actionenda for Actionenda for Actionenda for Action

Although the appropriate measures fortackling corruption will depend on nationalcircumstances, there are a number ofcommon options:

successes, as in the Philippines and India, forexample, have often been in monitoring publicworks. In a number of countries, such asCambodia, NGOs have mobilized publicsupport for anti-corruption efforts.

Both media and civil society organizationscan thus keep up the pressure on politiciansand public services and hold them to account.If they have the benefit of a supportivepolitical environment, they can amplify andreinforce a government’s own commitment.

Seizing the MomentSeizing the MomentSeizing the MomentSeizing the MomentSeizing the Moment

Governments and civil society are thusfinding new ways to drive out corruption,working both from the bottom up and the topdown. National political imperatives are beingreinforced by international economic pres-sures. Asia’s largest corporations are nowglobal players and thus have to meet globalstandards, not just in the quality of theirgoods and services but in the way theyproduce them. That includes the influence ofcorruption, particularly in the extraction ofnatural resources. Consumers want environ-mentally ‘clean’ products – not those pro-duced by logging or mineral extractioncompanies working hand in hand withcorrupt administrations.

This combination of national and inter-national pressures is creating fresh opportu-nities across Asia and the Pacific. How canthe countries of the region best seize themoment? There is no one route or singleanswer. Action has to come from manydirections – from governments, civil societyorganizations, the media and private businessworking together.

Much of this involves the pursuit ofjustice and retribution. However, anti-corruption campaigns can also be viewed in amore positive light. There are also hugepolitical and economic dividends on offer. For


1. Join with international efforts – Allcountries in the region should join theUnited Nations Convention AgainstCorruption, and the Stolen AssetsRecovery Initiative.

2. Establish benchmarks of quality – To judgetheir success, governments can useinternational benchmarks – for anti-corruption agencies, for example, and forthe national media.

3. Strengthen the civil service – Some govern-ments could raise salaries, but all shouldbe able to ensure merit-based recruitmentand promotion – along with morerigorous systems of control. Governmentsand donors will clearly need to investmuch more in local government.

4. Encourage codes of conduct in the privatesector – Among the professions, the mostcritical codes are those of lawyers andaccountants.

5. Establish the right to information – Allcountries in the region could enact lawson the right to information – andencourage public officials, the media andcivil society organizations to takeadvantage of this right.

6. Exploit new technology – Informationtechnology and e-governance offer fresh

opportunities to break the informationmonopoly of corrupt officials.

7. Support citizen action – Local governmentsshould publish the basic information oncontracts to facilitate citizen auditing;individuals can do much as citizens andconsumers, including keeping themselvesinformed and networked.

TTTTTaking the Higher Pathaking the Higher Pathaking the Higher Pathaking the Higher Pathaking the Higher Path

The developing countries of Asia and thePacific are likely to shed many corrupt prac-tices as a natural by-product of moderniza-tion. But they need not simply wait fordevelopment to take its course. Nor shouldthey. Just as most countries are designingtargeted policies and programmes to eliminatepoverty and meet the other MillenniumDevelopment Goals, so they can deviseprogrammes specifically to tackle corruption.Uprooting corruption will not just improvegovernance and economic efficiency; it willalso help reduce poverty and promote humandevelopment. In this light, anti-corruptionmeasures are not just about prevention orpunishment. They are also about establishingfairer societies. The history of corruptiondoes not have to be the region’s destiny.

One cannot conceal problems forever.SAMOAN PROVERB

Just as it is impossible not to taste honey orpoison that one may find at the tip of one’stongue, so it is impossible for one dealing withgovernment funds not to taste, at least a littlebit, of the King’s wealth . . . it is difficult,though not impossible, to stop governmentofficials from hiding their corrupt take.THE ARTHASHASTRA

CHAPTER 1: THE SCOURGE OF CORRUPTIONTHE SCOURGE OF CORRUPTIONTHE SCOURGE OF CORRUPTIONTHE SCOURGE OF CORRUPTIONTHE SCOURGE OF CORRUPTION 1717171717

ChapterChapterChapterChapterChapter

The ScourThe ScourThe ScourThe ScourThe Scourggggge of Corruptione of Corruptione of Corruptione of Corruptione of Corruption 11111

People across theAsia-Pacific region,

as elsewhere, arebecoming increas-

ingly concernedabout the scourge

of corruption

People across the Asia-Pacific region, as else-where, are becoming increasingly concernedabout the scourge of corruption. They can seethe damaging effects of it in the form of weak-ened national institutions, inequitable socialservices, and blatant injustice in the courts,along with widespread economic inefficiencyand unchecked environmental exploitation. Itis also evident that corruption hits the poorhardest, who often depend heavily uponpublic services and the natural environmentand are least able to pay bribes for servicesthat should be theirs by right.

There are signs of growing support foranti-corruption action today. Responding topublic concern, governments want to be seento fight corruption, not enable it. Civil societytoo is working to make the public and privatesectors more accountable. Media are moreaggressively exposing corruption. Popularanger against corruption, real or perceived,has also been utilized to destabilize electedgovernments, with unfortunate consequencesfor democratic governance.

There is also greater international com-mitment. This is evident in the 2005 UnitedNations Convention Against Corruption,which is the first global legally binding anti-corruption instrument and requires membersto implement its far-reaching reforms.Towards the end of 2007, 140 governmentshad signed the Convention and 104 had

Corruption is by no means a new phenomenon in the Asia-Pacific region but nowadays it iscoming under much closer scrutiny. While corruption may be difficult to pin down and measure,there is little doubt that it is pervasive, ranging from petty corruption to grand corruption to‘state capture’ – all of which errode trust in government and business and discriminate harshlyagainst the poor.

ratified or acceded it. Recognizing the com-plexity of the issue, the Convention stresses across-border approach based on cooperationinvolving governments, civil society and theprivate sector to fight corruption. It promotesa five-pronged anti-corruption strategy –prevention, criminalization, internationalcooperation, asset recovery and mechanismsfor implementation.

Till now attention on corruption has con-centrated more on its effects on economicgrowth and the business climate and less onthe impact on human development – on theways in which bribery and graft siphon offscarce national resources and weaken govern-ments’ abilities to deliver public services andprotect the interests of the poor. There hasalso been less attention to the ways in whichcorruption affects the livelihoods of poorhouseholds and frustrates many of their ownefforts to improve their lives. The result, asAmartya Sen repeatedly points out, is areduction in the capabilities of large segmentsof the population.1

One might think that corruption is aproblem that will eventually go away – per-haps owing to rapid development and im-provements in living standards along withmore efficient and effective government. In-ternational experience suggests otherwise.Even the most mature democracies and ad-vanced economies have to remain alert to the


power; it should be available, whether in public or privatehands or both

• Misuse of the power that often drives a wedge betweenintended and stated positions, for unintended benefits

The last prerequisite is complicated by the fact that whatconstitutes ‘misuse’ or unacceptable behaviour could differ bycontext, shaped by local norms and priorities. Social norms aredifficult to ignore in identifying corruption. And norms tendto have local variants, their plurality leaving space open forinterpretation. The differences are not limited to cross-coun-try variations; there are, equally, differences within a countryas well.4 A further complication arises when norms are notuniversally held even in local contexts.5 Under such circum-stances, whose norms should receive primacy remains an openquestion. Corruption often constitutes a divergence between astated position and actual intent.

Sources: Gampat 2007a; Rajivan 2007b.

Corruption can takeon many formsranging from thegross to the subtle,some of which arenot widelyunderstood

dangers of corruption. The countries of theAsia-Pacific region need therefore, not just touproot corruption now, but also build institu-tions and processes that could help keep a lidon it on a continual basis for the future aswell.

What is Corruption?What is Corruption?What is Corruption?What is Corruption?What is Corruption?

Corruption is commonly defined as the ‘mis-use of entrusted power for private gain’ (Box1.1). Note that this does not restrict thepotential for corruption to only the govern-ment. Individuals in private companies inprivileged positions may take bribes to pro-vide goods or services that are in shortsupply. The definition is, however, limitedsince it portrays corruption as a one-wayprocess driven by the greed of corrupt offi-cials. In fact, almost all corrupt transactionshave two players – the person who is receiv-ing the bribe and the corporation or individualwho is offering it. Moreover, the balance ofpower is not necessarily on the side of thecorrupt person with ‘entrusted power’, sinceoutside influences can serve to overwhelmweak and ineffective administrations.2

Some acts of corruption involve coercion– a demand for a bribe, for example, or extor-tion. This tends to happen in secret but mayalso become public if the victim protests. Oth-ers involve collusion between the corrupt offi-cial and the corruptors – a premeditatedmeeting of minds that is harder to detect asboth parties have an interest in concealment.Corruption can take on many forms rangingfrom the gross to the subtle, some of whichare not widely understood. The phenomenonis thus difficult to capture in a single defini-tion or measure.

An AgAn AgAn AgAn AgAn Agency Fency Fency Fency Fency Framewramewramewramewrameworkorkorkorkork

One way of considering corruption is withinthe framework of ‘principals’, ‘agents’ and‘clients’. The principals want to ensure that aparticular service or activity is delivered toclients, but since they are not in a position todo everything themselves, they will employagents to work on their behalf. In govern-ment, the principals can be elected officialswho represent the state and its citizens andemploy a wide range of public servants – fromtax officials, to labour inspectors, to teachers

BOX 1.1CHARACTERISTICS OF CORRUPTION

Corruption is such a complex phenomenon that attempting auniversal definition of it is fraught with difficulties. To un-derstand the phenomenon better, we may nevertheless iden-tify some core characteristics or prerequisites for a corruptact. Here are six:

• Gap between group and individual interest or betweenshort- and long-term benefits

• Two or more parties since one can hardly be corrupt withone’s own self

• Consenting adults that have a common understanding,with reciprocity, explicit or understood, whether by collu-sion, coercion, through perceived lack of choice, passive orfacilitative3

• Benefit furtherance, be it private, sectional, or politicalparty interest

• Existence of power that could be grabbed, usurped, en-trusted or otherwise available; corruptors (givers) can have


– to deliver public services to citizens. Princi-pals could also, ultimately, be the voters.Similarly, in the private sector the owners ofcompanies are principals who employmanagers to do most of the day-to-day

work and provide services and goods tocustomers.

The problem arises when the agents takeadvantage of the power entrusted to them towork on their own behalf or on behalf of their

BOX 1.2THE MOST COMMON FORMS OF CORRUPTION

The following are the most common forms of corruption, asdescribed in the United Nations Anti-corruption Toolkit.

Bribery. The bestowing of a benefit in order to unduly influ-ence an action or decision. This is the most common form ofcorruption. It can be initiated by a person who seeks or solic-its bribes or by a person who offers and then pays bribes. The‘benefit’ in bribery can be virtually any inducement: moneyand valuables, company shares, inside information, sexual orother favours, entertainment, employment or, indeed, the merepromise of incentives. The conduct for which the bribe ispaid can be active – the exertion of administrative or politicalinfluence – or it can be passive – the overlooking of someoffence or obligation. Bribes can be paid individually on acase-by-case basis or as part of a continuing basis.

Embezzlement, theft and fraud. In the context of corruption,these all involve the taking or conversion of money, propertyor valuables by an individual who is not entitled to them but,by virtue of his or her position or employment, has access tothem. In the case of embezzlement and theft, the property istaken by someone to whom it was entrusted. Fraud, however,consists of the use of false or misleading information toinduce the owner of the property to relinquish it voluntarily.For example, an official who takes and sells part of a reliefdonation or a shipment of food or medical supplies would becommitting theft or embezzlement; an official who inducesan aid agency to oversupply aid by misrepresenting thenumber of people in need of it, is committing fraud. Anordinary bystander, on the other hand, who steals aidpackages from a truck is committing theft but notcorruption. That is why the term ‘embezzlement’ essentiallymeans the theft of property by someone to whom it wasentrusted.

Extortion. This relies on coercion, such as the use or threat ofviolence or the exposure of damaging information, to inducecooperation. Officials in a position to initiate or conduct crimi-nal prosecution or punishment often use the threat of pros-ecution or punishment as a basis for extortion. While extor-tion can be committed by government officials or insiders,such officials can also be victims of it. For example, an officialcan extort corrupt payments in exchange for a favour or aperson seeking a favour can extort it from the official bymaking threats. In some cases, extortion may differ from brib-ery only in the degree of coercion involved. A doctor may

solicit a bribe for seeing a patient quickly but if an appoint-ment is a matter of medical necessity, the ‘bribe’ can be moreproperly characterized as ‘extortion’.

Abuse of discretion. For example, an official responsible forgovernment contracting may exercise the discretion to pur-chase goods or services from a company in which he or sheholds a personal interest or propose real estate developmentsthat will increase the value of personal property. Such abuseis often associated with bureaucracies where there is broadindividual discretion and few oversight or accountability struc-tures, or where decision-making rules are so complex thatthey neutralize the effectiveness of any accountability struc-tures that do exist.

Favouritism, nepotism and clientelism. This generally involvesabuse of discretion. Such abuses, however, are governed notby the self-interest of an official but the interests of someonelinked to him or her through membership of a family, politicalparty, tribe, religious or other group. If an individual bribesan official to hire him or her, the official acts in self-interest.If a corrupt official hires a relative, he or she acts in ex-change for the less tangible benefit of advancing the interestsof family or the specific relative involved (nepotism).

Conduct creating or exploiting conflicting interests. Most formsof corruption involve the creation or exploitation of some con-flict between the professional responsibilities of a corrupt in-dividual and his or her private interests. The acceptance of abribe creates such a conflict of interest. Most cases of em-bezzlement, theft or fraud involve an individual yielding totemptation and taking undue advantage of a conflict of inter-est that already exists.

Improper political contributions. It can be difficult to make adistinction between legitimate contributions to political orga-nizations and payments made in an attempt to unduly influ-ence present or future activities by a party or its membersonce they are in power. A donation made because the donorsupports the party and wishes to increase its chances of beingelected is not corrupt. A donation made with the intention orexpectation that the party will, once in office, favour the in-terests of the donor over the interests of the public is tanta-mount to the payment of a bribe.

Source: UNODC 2004.


corrupt exchanges occur, unless they are represented by malerelatives.

Without holding posts with potential bribery income, howcan women become ‘receivers’? In Bangladesh, for example,only 20 per cent of Civil Service cadre officers are female.Similarly, without access to substantial assets and to incomes,how can women equally be ‘givers’?

As workplaces become more feminized and women takeleadership jobs it cannot be assumed that women will be lesscorrupt. On the other hand, gender may influence the impactof corruption. Women are, for example, at risk of extortion forsexual favours instead of cash much more frequently thanmen. And when positions, grades, and diplomas can bebought, girls are less likely to benefit. Women, with less cashat their disposal are more likely to lose out. Finally, the fundsallocated for women’s development may be more easily stolenif women are less aware of their rights and less willing todemand accountability.

Sources: Alolo 2006; Dollar et al. 1999; Goetz 2007; Goetz andJenkins 2005; Nyamu-Musembi 2006; Swamy et al. 2000;Transparency International Bangladesh 2007.

Citizens who needservices may haveno option but topay – what isreferred to as‘needs-based’corruption or‘survival’ corruption

clients. Typically, they know far more aboutthe administration or the business than eitherthe principal or the client – a situation of ‘asym-metric information’ – and can exploit theirposition as go-betweens to act more in theirown interest, commonly through bribery,extortion, fraud, nepotism or embezzlement.

Grand and Petty CorruptionGrand and Petty CorruptionGrand and Petty CorruptionGrand and Petty CorruptionGrand and Petty Corruption

Within government, corruption can takemany forms, at many levels (Box 1.2). Thecommonest distinction is between ‘grandcorruption’ and ‘petty corruption’. In grandcorruption sums are large and agents are typi-cally high-level politicians or officials whocollude with corporations by, for example,accepting bribes from contractors. This isespecially prevalent in periods of rapid eco-nomic growth when there are many newopportunities for investment in infrastruc-ture, for example, or in the extraction ofnatural resources. In these circumstances,decisions are often taken secretly and quicklyand with little effective oversight. But even in

normal circumstances many areas of govern-ment activity such as arms supplies areshrouded in secrecy and are vulnerable togrand corruption.

Petty corruption, on the other hand, alsoreferred to as ‘street’ or ‘retail’ corruption,involves transactions that are smaller butusually more frequent. It generally involvesagents or sub-agents demanding or accepting‘speed money’ to issue licenses, for example,or to provide access to schools, hospitals orwater supplies. Unlike grand corruption,petty corruption often thrives during periodsof weak economic growth at times when goodsand services are in short supply – though theagents can also deliberately create shortagesby raising additional bureaucratic hurdles.Petty corruption also has a more direct im-pact on the poor.

Citizens who need services may have nooption but to pay – what is referred to as‘needs-based’ corruption or ‘survival’ corrup-tion. Some may take the initiative in offeringbribes in order to gain privileged access or tojump queues. The poor, however, with the

BOX 1.3VIRTUOUS WOMEN, CORRUPT MEN?

It is popularly thought that women are more honest and lesscorrupt than men. This claim has been supported by a num-ber of studies which argue that women are less tolerant ofcorruption than men, and that having more women in publiclife would reduce corruption.

Statistics show that in the Asia-Pacific region, if a countryhas more women with secondary education, and a higher pro-portion of those working in the service sector are women,then the country’s score on the control of corruption indextends to be higher. On the other hand, the control of corrup-tion index does not show any significant correlation with theproportion of seats held by women in national parliament.Similarly, many of the countries in the region have been runby female presidents or prime ministers with no discernableimprovement in corruption.

In fact, many women would find it difficult to get involvedin corrupt dealings – even if they wanted to. Arenas wherecorrupt dealings take place are typically all-male networks andforums from which women are excluded. In India andBangladesh, for example, women cannot normally participatein the male-dominated patronage networks through which


same needs, do not have the same freedom topay for their needs to be met.

Areas of AmbiguityAreas of AmbiguityAreas of AmbiguityAreas of AmbiguityAreas of Ambiguity

Although many acts of corruption, whethergrand or petty, are clear enough, there canalso be areas of uncertainty between accept-able and unacceptable behaviour. Theseinclude:

Legality and illegality. Acts that many peoplewould regard as corrupt need not necessarilybe illegal. Until a few years ago it was quitelegal for companies based in OECD countriesto bribe officials in other countries. Onlyrecently has this become a crime in thecompany’s home country. On the other hand,there are many illegal acts which do notinvolve corruption. A government official whosteals a car in the street is guilty of theft, butif he or she acquires it by abusing their privi-leged position in the administration, then thisconstitutes corruption.

Ethics of survival. In many Asia-Pacific coun-tries people engage in what might be called‘survival corruption’ in order to meet basicneeds. Faced with poverty and shortages theywill do whatever is needed to support them-selves and their families. Members of poor ormarginalized groups might, for example, stealwater or electricity in collusion with a locallines-man, or bribe a petty official to falsify anaddress to make them eligible for a ration card.

Private and public. In many countries acrossAsia and in smaller states in the Pacific, wherethere are strong notions of hierarchy, it is con-sidered right to make payments to those inauthority as a way of showing respect. Inthese cases the public-private interface is ill-defined. Power is seen to reside not in officesor institutions but in the persons of high offi-cials, and lines of authority are drawn not

from one function to another but from oneperson to another. These lines are furtherblurred when public officials have ties withcertain groups of citizens based on ethnicity,religion, or language and may tend to favourthem, even if they do not have any direct fi-nancial gain.

Gift giving. When is a gift a bribe? In manysocieties across Asia and the Pacific, dailytransactions and social networking commonlyinvolve gifts, typically consumable items suchas food. Indeed in many Pacific countries notgiving a gift can be seen as corruption. In re-cent times, however, traditional systems ofgovernance have been combined with ‘intro-duced’ systems and as the two interplay, gift-giving has been extended to non-consumableitems such as land. This manipulation of thepractice of gift giving has often led to the jus-tification of corrupt acts. However it can beargued that in most cases both the ‘givers’ andthe ‘takers’ know when the lines are beingcrossed and a supposed gift is actually a bribefor a specific favour.

Lobbying. Many developed countries, frownupon bribery yet allow high-powered lobby-ists to bombard public officials with one-sidedinformation and arguments. The lobbyists donot provide cash but offer free ‘services’ suchas research and information with the inten-tion of biasing lawmaking or awarding ofcontracts in their favour. Lavishly funded lob-bying can be considered as a form of corrup-tion.

State capture. This refers to a situation whereprivate interest has effectively taken over cer-tain state functions, a type of corruption gen-erally less understood by the public or by themedia. One example is when an internationalmining company is largely determining thecontours of a country’s mining policy. Cor-ruptors who have achieved state capture do

Traditional systemsof governance have

been combined with‘introduced’ systems


nance of certain sports has given sports official’s diplomaticstatuses and other absolute privileges making them lessaccountable and more susceptible to corruption.

Sport can itself also be used as a way to corrupt otherprocesses. In Sri Lanka, for example, making it onto a highschool sports team comes with a certain level of prestige thatis helpful in securing better employment. Thus it would bebeneficial at an interview if one belonged to the same alumnias the interviewer and even better if one was a member ofits cricket or swimming team.

Many of the exposures of corruption in sport have beenthe result of tireless work by investigative journalists andorganizations dedicated to ensuring fairness in sport. Interna-tional sports organizations have also been making determinedefforts. FIFA, for example, has recently introduced an ethicscommissions and created a commercial firm called ‘EarlyWarning System’ and the ICC now has an Anti-Corruptionand Security Unit – approaches that could be emulated byother sporting bodies.

Sources: BBC, 2007; FIFA.com 2007; ICC n.d.; Poroznuk andPfeifer 2006; Transparency International 2006b.

Corruption isintrinsically boundup with socialnorms and practices

not simply take the institutions as given butalso seek to shape them: they are thus‘makers’ rather than ‘takers’. Companiesoften achieve this through corrupt and illegalpractices – for example, by bribing law-makers to adjust legislation in their favour,so that their subsequent activity may now belegal but is actually corrupt. This can betermed ‘legal corruption’.6

Corruption is thus intrinsically bound upwith social norms and practices.7 Indeed,some people argue that it is not something towhich countries in the region should respond– that efforts to combat corruption involveimposing Western or developed country biaseson very different societies. In this context,however, it is important to distinguishbetween cultural pluralism and cultural rela-tivism. Cultural pluralism acknowledges thattraditional practices are different and thatthese differences will affect the forms ofcorruption, but it is nevertheless consistentwith an underlying set of universal principlesthat would condemn corruption.

Cultural relativism, on the other hand,would say that it is impossible to applyvalues across traditional practice systems;each country has to work out its own prin-ciples of right and wrong – including those oncorruption. A related issue is cultural deter-minism which asserts that certain traditionalpractices are innately more prone to corrup-tion. Some studies have indeed foundevidence for the fact that traditional practicesdo matter but they do not show that some aredestined for corruption or are likely to bemore tolerant of it.8

A ScourA ScourA ScourA ScourA Scourggggge thre thre thre thre through the Agough the Agough the Agough the Agough the Ageseseseses

Corruption is certainly not a new phenom-enon. Governments across the Asia-Pacificregion have been preoccupied with this issueever since they started to build states on thebasis of funds collected from peasant agricul-ture. Rulers who wanted to raise funds forwars of conquest or to reward court follow-ers and the local nobility had to employ tax

BOX 1.4JUST NOT CRICKET

Participation in sports helps young people learn honesty, disci-pline and teamwork. But at the professional level, many sportssuch as cricket, rugby and football are extremely lucrativemulti-billion dollar enterprises and sports bodies such as theFédération Internationale de Football Association (FIFA) andthe International Cricket Council (ICC) are accorded statusessimilar to those of governments. However, this boom hascome at a price and Transparency International argues thatcommercialization of sport has promoted opportunism for‘dirty business’ to thrive. FIFA and the ICC have taken someaction to monitor irregularities, although there is a lot moreto do.

In the Asia-Pacific region one of the most popular sports iscricket, which in the last decade has been marred by match-fixing and bribery scandals that have caused major players toleave the game in shame. At the administrative level seniorofficials have been sacked for using their authority for per-sonal gain and entire boards have been dissolved.

The potential gains from corruption are also large when itcomes to choosing venues for huge events like the Olympicsand the Football World Cup, when politicians may be temptedto bribe the officials of governing bodies. In addition, the domi-


FFFFFigurigurigurigurigure 1.1: Declining Te 1.1: Declining Te 1.1: Declining Te 1.1: Declining Te 1.1: Declining Trrrrrend in Corruption and Fend in Corruption and Fend in Corruption and Fend in Corruption and Fend in Corruption and Fraud, 1815–1975raud, 1815–1975raud, 1815–1975raud, 1815–1975raud, 1815–1975

Note: ‘NY Times (Corr + Fraud)/Political’ and ‘Ancestry (Corr + Fraud)/Political’ areseries based on the count of articles containing the words ‘corruption’ and ‘fraud’ (andtheir variants). For the Y-axis, this count is standardized, providing an ‘index ofcorruption and fraud’ dividing by the number of articles containing the word ‘political’(and its variants), taking into account the overall amount of attention given to politically-relevant stories on corruption and fraud.

Source: Based on Glaeser and Goldin 2006.

The EmperorYongzheng . . .

concluded that thetax system was fullof abuses and . . .

responded with aseries of reforms,

including improvingfinancial records ofprovincial authori-

ties . . . andincreasing the

salaries of localofficials through a

bonus calledyang-lien ‘money to

nourish honesty’

collection agents – who then spied an oppor-tunity for self-enrichment. The statesmanand philosopher Kautilya, for example, wrotein the fourth century BC about the King’sservants who were skimming off a part of hisrevenue. ‘Just as it is impossible not to tastehoney or poison that one may find at the tipof one’s tongue, so it is impossible for one deal-ing with government funds not to taste, atleast a little bit, of the King’s wealth.’9

Kautilya went on to suggest that it is difficult,though not impossible, to stop governmentofficials from hiding their corrupt take. Thereare different versions of the same saying allover the ancient empires of the world. Andmany of the solutions advocated today,such as raising the salary of officials orimproving records of property rights and taxliabilities have also been advocated since timeimmemorial.

Among all the ancient empires, Chinacame closest to organizing a centralized andeffectively managed bureaucracy – with allthe requirements for bringing corruptionto heel: political commitment from theEmperor; a system of pay and benefits for thescholar gentry; a moral-ethical code providedby Confucian doctrine that emphasized orderand hierarchy; a system of audits and inspec-tion; and, by no means least, harsh punish-ments for disobedience.

Nevertheless, corruption remained a per-sistent problem. The Emperor Yongzheng(1723–35), for example, concluded that thetax system was full of abuses and that localfinancial clerks had been accepting payoffs toexempt wealthy families from nearly all theirtax obligations. He responded with a series ofreforms, including improving financialrecords of provincial authorities, carrying outspecial inspections and increasing the salariesof local officials through a bonus calledyang-lien ‘money to nourish honesty’.

Similar problems were evident in mostother countries in Asia and beyond. Until thenineteenth and early twentieth century, manyof the now developed countries were riddledwith corruption. In some, for example, muchof the public funding for basic services suchas street cleaning and construction wasdiverted through kickbacks. Since then,matters have improved considerably; never-theless it took some of these countries almosta century to reform. One way of followingthis slow process, for example, is to track thesteady decline in mentions of ‘corruption’ or‘fraud’ in dailies (Figure 1.1). The figureshows that corruption declined over a period(long) as captured by reporting, controllingfor space given for political reporting.National reporting (The New York Times) iscorroborated by small town and city report-ing (Ancestry.com).10


Asia, on the other hand, provides severalcases of countries that have managed toreduce corruption much more swiftly. Before1960, Singapore, for example, was as corruptas in many other places in Asia. Then in June1960 the People’s Action Party introduced thePrevention of Corruption Act, whichenhanced the powers of the Corrupt PracticesInvestigation Bureau. As a result, by 1965,when the country attained its independence,the situation had been turned around andtoday Singapore is of the cleanest and mosteffective bureaucracies in the world.11

Around the same time, Hong Kong toostarted to take firm action against corruption.The early 1970s was a time when ‘bad copsand bribes ruled the streets’.12 The policewere largely in charge of running crime, whileregularly staging ‘fake busts’ to give an im-pression of honest action. Widespread publicdissatisfaction, however, eventually resultedin strong action. In 1974 the governmentestablished the Independent Commissionagainst Corruption and by 1977 this hadhelped break all major corruption syndicates,including those within the police force.

Singapore and Hong Kong had the advan-tages of being city territories over which itproved easier to exert control, but probablythe most important reason for their successwas strong political will. In most other coun-tries in Asia, anti-corruption efforts have gen-erally been slower because they cover muchlarger territories and because the leadershiphas proved less resolute.

A ChallengA ChallengA ChallengA ChallengA Challenge for International Ore for International Ore for International Ore for International Ore for International Orggggganizationsanizationsanizationsanizationsanizations

The past 60 years or so have seen a consider-able increase in the number and scope ofinternational organizations. Nor surprisingly,these too have proved vulnerable to corrup-tion and have had to re-examine theirmethods of operation so as to achieve greater

transparency and accountability, confrontingmalfeasance head-on and improving manage-ment. This is vital if they are to fulfil the goalsof partners, staff and donors, and above allthe beneficiaries.

This has involved, for example, tighten-ing up many policies and practices, strength-ening ombudsman offices, requiring seniorstaff to disclose their assets and liabilities,increasing legal protection for whistleblowers,and introducing independent audit offices.Agencies are also publishing more informa-tion through websites and other media. Theyhave added to this impetus for reformthrough the formation of staff associationsand institutions such as ‘town hall meetings’in which they can air their grievances to themanagement.13

Measuring the ProblemMeasuring the ProblemMeasuring the ProblemMeasuring the ProblemMeasuring the Problem

Just as it is difficult to define corruptionacross different cultures and political envi-ronments, it is also very difficult to measureits extent. One might consider, for example,the amount of money being lost, but thismisses out the number of people involved.And both the money value and the number ofpeople miss out on the social loss in under-mining institutions. And in either case, sincecorruption is generally illegal and clandestine,it is hard to track it directly.

Instead, the most common measureswork indirectly, based not on registeringspecific corrupt acts but people’s perceptionsof the extent of corruption. One of the mostwidely cited examples is the ‘CorruptionPerception Index’ (CPI) produced by Trans-parency International (TI).14 Since 1995 TIhas been collecting the ratings of businesspeople and country analysts and averagingthem into a single index. By 2007 the CPIcovered 180 countries and appeared as awidely publicized league table which regularly

Singapore and HongKong had theadvantages of beingcity territories butprobably the mostimportant reasonfor their successwas strong politicalwill


listed several Asian countries as among theworld’s most corrupt. Since 2003, TI hassupplemented the CPI with the GlobalCorruption Barometer which is based on aGallup International Poll that explores the is-sues in greater detail, considering not just per-ception, but also direct experience, and by2006 covered 62 countries.

Another widely used source, producedsince 1996 by the World Bank, is the Controlof Corruption Index (CCI). Although its titlesuggests that it is measuring the effectivenessof measures to control corruption it is, in fact,another perception index. It does howeverdiffer in a number of respects from the CPI. Itgathers data from a wider range of sourcesthan the CPI and also covers petty and grandcorruption as well as situations of state cap-ture. In addition, the CCI uses different statis-tical techniques that make it better suited forcomparisons across countries and over time.While interpreting the CCI, it should be notedthat it combines perceptions and observed data.

Other sources of corruption rankingsinclude those from private consultanciesdesigned to offer businesses and investors anindication of the investment climate in eachcountry. The International Country RiskGuide, for example, includes subjective assess-ments conducted by staff on the ‘likeliness todemand illegal payments in high and lowlevels of government’.

These indices do indeed provide some in-formation of relevance and spur countriesinto responding. But they may not give a veryaccurate reflection of the actual situation andmake little attempt to gauge the pressures andthe effects on the poor. Mostly they are ori-ented towards businesses though they mayalso be used by donors to make decisions onthe distribution of foreign aid. They can alsobe useful at the regional level for comparativepurposes – for which this report will use theCCI index. Another approach would be to

compare each country’s vulnerability to cor-ruption by considering factors such as the sizeof the public sector, or marginal tax rates(Box 1.5). But ultimately, no single metricwould work in uniquely measuring the phe-nomenon.

Forms of GovernmentForms of GovernmentForms of GovernmentForms of GovernmentForms of Government

History has demonstrated that all forms ofgovernment are vulnerable to corruption butsome may be more vulnerable than others. Itmight be argued, for example, that, authori-tarian leaders, such as Chinese emperors,would have found it easier to deal with corrup-tion because they can act against corrupt offi-cials quickly and ruthlessly without the needfor prolonged and uncertain judicial processes.On the other hand, authoritarian leaders mayalso deliberately foster a more corrupt envi-ronment as a result of what has been calledthe ‘dictator’s dilemma’: the more power adictator has the more insecure he feels, so hedistributes opportunities for ‘rent gathering’and other favours as ways of building sup-port and trust.

Similar considerations can apply in demo-cratic systems. Democracies are betterdesigned to control corruption since citizenscan take advantage of regular elections to voteout corrupt politicians, but the quality ofdemocracy determines if this mechanism isactually exercised. Democracies can also besusceptible to corruption if politicians becomebeholden to wealthy donors on whom theyrely for electoral funds and who will expectfavours in return. This popular disillusion-ment has recently led to the overthrow ofmany democratically elected regimes on theexplicit grounds of corruption, such as inBangladesh, Fiji and Thailand.

One way of checking which system iscleaner in practice is to compare the indicesof corruption with those of democracy. This

History hasdemonstrated that

all forms ofgovernment are

vulnerable tocorruption;

democracies arebetter designed tocontrol corruptionsince citizens cantake advantage of

regular elections tovote out corrupt

politicians


BOX 1.5COUNTRY VULNERABILITY TO CORRUPTION

Most popular measures of corruption are based, at least inpart, on perception. Another approach might be to chart the‘climate’ for corruption by identifying factors that may makea country vulnerable to corruption. This Report makes a mod-

depending upon the country context. A more detailed discus-sion of these indicators is given in Technical note 2.

is illustrated in Figure 1.2 which plots theControl of Corruption Index against an indexproduced by the Economist Intelligence Unitwhich rates countries along a scale from 0(authoritarian regimes) to 10 (full democ-racy). On this basis, countries at the highestranking on the democracy scale tend also tobe high on control of corruption, though there

are some outliers, such as Bhutan, Hong Kong(SAR), China and Singapore, which appearto have done exceptionally well in controllingcorruption. The pattern is similar within thesample of developing countries and alsowithin developed countries.

This is, of course, only a correlation. Itdoes not indicate whether democracy itself

est start in this direction by trying to identify likely factorsand seeking out appropriate, observable indicators on whichdata are available. Below 21 indicators are grouped into 12categories.

Factors Capturing the Vulnerability of Countries to Corruption

Categories Indicators

Taxation system Highest marginal tax rate, individual rate (%)

Highest marginal tax rate, corporate rate (%)

Trade policy Trade restrictiveness index (Tariff and NTF manufacturing)

Regulatory policy and transaction costs Start-up procedures to register a business (number)

Procedures to enforce a contract (number)

Procedures to register property (number)

Level and nature of public expenditure Military expenditure (% of GDP)

Public investment (% of GDP)

Inequality Ratio of the top 20% to bottom 20%

Access to services No access to improved water source (% of population)

Physicians per 1,000 people (reciprocal – to make it unidirectional)

Gross non-enrolment rate (Combined primary, secondary and tertiary) (%)

Dependence on natural resources Mining (% of GDP)

Access to knowledge and information Illiteracy rate, adult total (% of people ages 15 and above)

Internet non-users (% people)

No subscription to fixed line and mobile phone (% people)

Relative wages in public sector Military personnel exp per capita/per capita income (Proxy indicator, reciprocal tomake it unidirectional)

Importance of FDI/ODA FDI (% of GDP)

ODA (% of GDP)

Informal Sector Informal sector (trade + construction + other) as % of GDP (Proxy indicator)

Extent of cash transaction Currency in circulation (% of money supply)

Source: Gampat, Sarangi, Wickramarathne and Senarathne 2007.

The 21 indicators are unidirectional in the sense that allindicators contribute positively to vulnerability to corruption.Of course, the relative importance of the indicators will vary


Figure 1.3: Political Systems in the Asia-Pacific RegionFigure 1.3: Political Systems in the Asia-Pacific RegionFigure 1.3: Political Systems in the Asia-Pacific RegionFigure 1.3: Political Systems in the Asia-Pacific RegionFigure 1.3: Political Systems in the Asia-Pacific Region

Colour codes: Green – parliamentary republics; Brown – presidential republics; Blue– semi-presidential republics; Violet – parliamentary constitutional monarchies inwhich the monarch does not personally exercise power; Yellow – republics where thedominant role of a single party is enshrined in the constitution; Red – absolutemonarchies

Source: Tran 2007.

ure also shows, even the region’s parliamen-tary democracies have lower scores than thosein the rest of the world. On the other hand,the region appears to enjoy some of theworld’s least corrupt monarchies.

This perspective is confirmed by manycross-country and multivariate analyseswhich show that that corruption is

The moreexperience a

country has withdemocracy, the

better it canaddress corruption

helps reduce corruption. However there havebeen efforts to explore causality. Treisman(2000), for example, using data from 64countries, suggest that there is a connection,but he ascribes this not just to the currentdegree of democracy but to the length of timea democratic system has been in place: themore experience a country has with democ-racy, the better it can address corruption.This implies that in the short term comparedwith more authoritarian states, young democ-racies such as Cambodia, Indonesia, or thePhilippines may have little advantage. But inthe long term, when these countries have ac-cumulated more experience with democraticinstitutions and improve the quality of theirdemocratic practice, they would be able toaddress corruption more effectively.

Parliamentary and Presidential SystemsParliamentary and Presidential SystemsParliamentary and Presidential SystemsParliamentary and Presidential SystemsParliamentary and Presidential Systems

There are, of course, many different shadesand types of democracy. One of the clearestdistinctions is between parliamentary andpresidential systems. The Asia-Pacific regionis distinct from the rest of the world in that ithas a lower proportion of presidential or semi-presidential systems. In the rest of the world55 per cent of states have these systems. Inthe Asia-Pacific region, on the other hand, only27 per cent of countries do so; 58 per centhave parliamentary systems, the rest beingmonarchies or one-party states (Figure 1.3).

How do the different systems rate on theCCI? This is illustrated in Figure 1.4, whichshows that the region’s democracies tend todo better, achieving a simple average score of0.1 compared with presidential and semi-presidential systems which get scores of –0.7and –0.4 respectively. Somewhat surpris-ingly, the presidential and semi-presidentialsystems in Asia and the Pacific do not per-form significantly better than one-party sys-tems, which have a score of –1.1. As this fig-

Figure 1.2: Political Systems and Perceptions of CorruptionFigure 1.2: Political Systems and Perceptions of CorruptionFigure 1.2: Political Systems and Perceptions of CorruptionFigure 1.2: Political Systems and Perceptions of CorruptionFigure 1.2: Political Systems and Perceptions of Corruption

Sources: EIU 2007; World Bank 2007b.


Figure 1.5: Decentralization and Perceptions of CorruptionFigure 1.5: Decentralization and Perceptions of CorruptionFigure 1.5: Decentralization and Perceptions of CorruptionFigure 1.5: Decentralization and Perceptions of CorruptionFigure 1.5: Decentralization and Perceptions of Corruption

Sources: Tran 2007; World Bank 2007b.

Corruption issignificantly lowerin parliamentarystates than inpresidential ones

Country Size and DecentralizationCountry Size and DecentralizationCountry Size and DecentralizationCountry Size and DecentralizationCountry Size and Decentralization

Corruption can also vary according to the sizeof the country. Some studies have found thatlarger countries tend to be more susceptibleto corruption than smaller ones, perhapsbecause in smaller countries people are morelikely to know their rulers and are in a betterposition to keep an eye on them.17 Large coun-tries might, however, be able to achieve asimilar effect by decentralizing administrationto lower levels of government, which localpeople would be better able to monitor andcontrol. This assumes however that localcommunities have the necessary capacity. Inpractice this is seldom the case – legal andmonitoring institutions are generally weakerand fewer at the local level, so decentraliza-tion can instead open the door to greatercorruption.

One way to assess this would be tocompare control of corruption with theextent of decentralization as indicated by theshare of national expenditure administeredat sub-national levels. As Figure 1.5 shows,this does not indicate any correlation. Indeeda number of studies that have attempted toassess the effects of decentralization oncorruption have come up with mixedresults.18 So although many governments arekeen on decentralization as a means of achiev-ing more effective governance, the benefits forthe control of corruption remain unproven.

Impact on PImpact on PImpact on PImpact on PImpact on People’eople’eople’eople’eople’s Livs Livs Livs Livs Liveseseseses

While it is interesting to consider in principlethe relationship between systems of govern-ment and perceptions of corruption,ultimately the most important issue is whichsystem offers greater protection to its citizensand is better able to promote human develop-ment. One indication of this is the Trans-parency International Global Corruption

Figure 1.4: Systems of Government and Control of Corruption IndexFigure 1.4: Systems of Government and Control of Corruption IndexFigure 1.4: Systems of Government and Control of Corruption IndexFigure 1.4: Systems of Government and Control of Corruption IndexFigure 1.4: Systems of Government and Control of Corruption Index

Note: Produced by the World Bank, the scores for the control of corruption index(CCI) range from –2.5 to 2.5; higher values indicate higher control of corruption;conversely, lower values indicate lower control over corruption.

Source: Tran 2007.

significantly lower in parliamentary statesthan in presidential ones.15 Others go furtherto show that corruption tends to increase asthe president gets more powerful and that itusually worse towards the end of the presi-dential term, maybe because by this stage theincumbent has little to lose.16


People clearly haveleast confidence inthe honesty of the

police, followed bythe judiciary and

tax offices

Barometer. This is compiled from opinionsurveys that ask people to rate the level ofcorruption in seven important aspects of theireveryday lives, on a scale from 1 (not at allcorrupt) to 5 (extremely corrupt). The resultsfor the Asia-Pacific region are shown inFigure 1.6.

Overall, people clearly have least confi-dence in the honesty of the police, followed bythe judiciary and tax offices – though higheror supreme courts are considered relativelyclean. Education and medical services rankin the middle of the scale, while the leastcorrupt sectors are utilities and registry orpermit services – although even here levels ofcorruption are still very high.

But as Figure 1.6 also shows, in each ofthe seven sectors it seems that ordinarypeople are best served by parliamentary sys-tems. Of the other systems, the presidentialones perform better than semi-presidentialones, though in both cases the perceived ratesof corruption are not only higher but varyconsiderably across sectors.

Hampering Economic PerformanceHampering Economic PerformanceHampering Economic PerformanceHampering Economic PerformanceHampering Economic Performance

Another matter of great concern is whethercorruption affects economic performance.This will be difficult to prove one way or theother since economic growth is clearly theoutcome of many different factors – up to 40factors have in different studies been identi-fied as having an effect on economic growth.19

Generally they appear to be detrimental toeconomic growth, but there can be exceptions.For instance, it may not appear to harmgrowth in countries which are in the processof modernization.20 Furthermore, the effectsmay only surface in the long term. Forexample, corruption may discourage innova-tion, or divert funds from productivity-enhancing investments towards those thatoffer more opportunities for rent-seeking.

Can Corruption Boost Growth?Can Corruption Boost Growth?Can Corruption Boost Growth?Can Corruption Boost Growth?Can Corruption Boost Growth?

One way in which corruption might bethought to help economic performance is by‘greasing the wheels’, i.e. allowing businessesto get quicker decisions, cutting through redtape and thus operate more efficiently. Incountries where laws are rigid and inappro-priate, circumventing these through briberymight increase efficiency. In fact, there is notmuch evidence that corruption has any suchbeneficial effect. One study found, forexample, that the firms that were required topay extensive bribes were still subject to highlevels of official harassment. It seems that ina highly corrupt environment, officials takeadvantage of this to develop more sophisti-cated approaches, ‘customizing’ the natureand scale of their harassment to each firmand its ability to pay bribes.21

Another suggestion is that corruptioncould compensate for weak government.Bureaucrats charged with choosing betweencompanies that are to be awarded contractsmay, for example, have neither the informa-tion nor the competence to make the decisions

Figure 1.6: Political Systems, Perceptions of Corruption Across Different SectorsFigure 1.6: Political Systems, Perceptions of Corruption Across Different SectorsFigure 1.6: Political Systems, Perceptions of Corruption Across Different SectorsFigure 1.6: Political Systems, Perceptions of Corruption Across Different SectorsFigure 1.6: Political Systems, Perceptions of Corruption Across Different Sectors

Source: Transparency International 2006a.


on objective criteria. They could thereforesimply award the contract to whoever offersthe biggest bribe – effectively holding anauction in which the contract goes to thecompany that places the highest valuation.This might be one way of achieving ‘allocativeefficiency’, but this assumes that the personoffering the biggest bribe also is the mosttalented entrepreneur with the best project,which is often not the case.

Bribery might also be seen as a way toincrease efficiency by allowing queuing andrationing systems to work more effectively,on the assumption that the person orcompany prepared to pay most is also the onethat can make the best use of the services.Indeed overall queuing times could be reducedif payments induce bureaucrats to work morerapidly.22 Even if this were the case, however,capacity to pay seldom coincides with realneed, so there will be a strong element ofinjustice.

A more fundamental objection to the‘grease’ hypothesis is that it assumes a staticenvironment in which businesses are facedwith a bad and unchanging bureaucraticenvironment. It is more probable, howeverthat businesses are sustaining this situationby their willingness and capacity to offerbribes – encouraging bureaucrats to increasetheir rigidity and unreel yet more red tape.Indeed in circumstances of rampant corrup-tion, even honest officials will tend to becomemore bureaucratic – not because they want toextract bribes but because they do not wantto be held individually responsible for anydecision where they could be accused oftaking bribes.

Moreover, for every case where corrup-tion is suggested as a way of increasing effi-ciency there are always cleaner courses ofaction that perform at least as well or better.The fear that eliminating corruption will leadto a loss in efficiency is clearly unfounded.

How Corruption could Hamper Growth?How Corruption could Hamper Growth?How Corruption could Hamper Growth?How Corruption could Hamper Growth?How Corruption could Hamper Growth?

On the other hand, it is also possible to iden-tify many more mechanisms through whichcorruption could hamper growth:

Allocation of talent. Economic activity will cer-tainly be hampered if people can earn moreby working as corrupt bureaucrats than asentrepreneurs. Corruption thus distorts theallocation of talent by steering people to lessproductive or unproductive sectors. In theend, this leads to a downward spiral thateven affects the income of corrupt officials. Ifthe productive sector shrinks and returns arelow, payoffs too will tend to fall, leading tohigh corruption with no growth.23 Talent isalso allocated to maximize family benefitthrough diversification, such as when onefamily member joins politics, another thebureaucracy and a third the private sector.This is often done to ‘hedge’ any risk involvedin changing political circumstances, forexample, when an opposing political partycomes to power.

Size of the formal sector. A corrupt system mayalso prevent entrepreneurs from moving fromthe informal to the formal sector. Entrepre-neurs who want to register their business mayhave to pay a high level of bribes to get thenecessary documentation. If the informal sec-tor is less productive or the cost of doing busi-ness in the informal sector is very high, thenlong-run growth will be lower. However, if thecost of operation in the informal sector is low,bureaucratic corruption may not have any ef-fect on growth.24

Availability of public goods. Economic growthrates also depend on the level of government-provided public goods.25 Corruption can af-fect these in several ways. Fiscal corruption,for example, could reduce government rev-


Even if corruptiondoes not slow

down investment orproduction in the

short term, bydeterring innovationit can have serious

implications forlong-term growth;

corruption willhave less effect on

growth in countrieswith strong

governments

enues leading to lower investment in infra-structure. But even in the absence of fiscalcorruption, bureaucratic corruption generallycauses public goods to be under-supplied andoverpriced.

Innovation. Corruption is likely to hamperinnovation.26 This is because innovatorswhen starting from scratch tend to havegreater need for government-produced goodsand services and also have riskier projectsthat are vulnerable to bureaucratic delays. Soeven if corruption does not slow down invest-ment or production in the short term, bydeterring innovation it can have seriousimplications for long-term growth.

Empirical ResultsEmpirical ResultsEmpirical ResultsEmpirical ResultsEmpirical Results

In principle therefore corruption is likely toslow economic growth, and a number ofempirical studies have indeed suggested thathigher levels of corruption are associatedwith lower levels of growth – though thecorrelation is weaker in Asia than else-where.27 One, for example, concludes that a10 per cent increase in corruption perception,would lead to a 2.8 per cent reduction ingrowth rate in Africa, and 2.6 per cent inLatin America but only 1.7 per cent in Asia.28

This reduction in growth results to someextent from reducing investment29 butmainly from undermining political stabilitywhich in one study accounted for around two-thirds of the effect of corruption on growth.30

This suggests that corruption will have lesseffect on growth in countries with stronggovernments.

The link between corruption and growthcan also depend on the size of the country.31

Corruption may seem less damaging togrowth in larger countries. In East Asia anumber of large countries with high perceivedlevels of corruption have also sustained high

levels of economic growth. This may belinked to market size since investors may bewilling to accept the risks posed by corrup-tion if they are offset by the potential of alarge consumer market. Growth rates seemto have been slower in smaller countries –with the exception of city states where anti-corruption efforts have been successful.

Another factor is the way in whichcorruption is organized.32 Many people haveargued that corruption is less harmful togrowth when it is predictable – when, forexample, a strong but corrupt ruler demandsfor himself and his entourage a standardpercentage on all major activities. This mightexplain why many Asian countries have sus-tained rapid growth despite high levels ofcorruption – compared with other regions likeAfrica, where corruption is thought to bemore disorganized. One study using a WorldBank dataset confirmed that investmentboosts productivity even at high levels ofcorruption. However, it also found that as thelevel of corruption rose it also becomes lesspredictable, so it would be wrong to believethat corruption can always be safelymanaged.33

Corruption will also have a less corrosiveeffect on the economy if corrupt politiciansand officials work with a long-time horizonand deliver genuine benefits to the payers ofbribes. During the 1980s and 1990s in anumber of East Asian states, politiciansestablished long-term relationships withcapitalists; in exchange for bribes and kick-backs they provided valuable promotionalprivileges. In other countries where officialsextracted bribes in a less predictable fashionand offered fewer real benefits growth tendedto be slower.34

In addition to comparing the experienceof different countries it might also be possibleto look at groups of countries in Asia Pacificregion and see if changes over time in the


Figure 1.7: Control of Corruption Index and GDP GrowthFigure 1.7: Control of Corruption Index and GDP GrowthFigure 1.7: Control of Corruption Index and GDP GrowthFigure 1.7: Control of Corruption Index and GDP GrowthFigure 1.7: Control of Corruption Index and GDP Growth

Note: GDP growth in the figure is the annual per cent change of GDP at constant2000 prices. GDP growth is graphed on the left axis and control of corruption indexis graphed on the right axis.

Sources: World Bank 2007b; World Bank 2007c.

As the crisiscontinued,corruption alsoweakenedgovernments’capacity to respondand to protectthe poor

perceived levels of corruption correlate withchanges in economic output. However, theopportunities for doing so are limited. TheCCI, for example, has been produced onlysince 1996 and annually only since 2000. Forsome of the most dynamic economies of theregion this provides only eight observations,some of which were during the Asian finan-cial crisis, when the economic and politicalenvironment was in rapid flux.

Certainly there does not seem to be anycorrelation for individual countries. Take theexample of Bangladesh which according to theCCI ranking is one of the world’s worstcountries in terms of corruption control. Yetit has achieved steady growth which does notcorrelate with the level of the CCI; indeed,corruption has become worse according tothis index (Figure 1.7). This experience may,however, be temporary in a country makingthe transition to a more free marketeconomy.35 Yet, despite what high level ofcorruption might suggest, Bangladesh hasmade remarkable progress in certain socialindicators such as in health (immunizationrates and infant mortality) and gender

equality in education. The vibrant NGOsector in the country, along with government,has been instrumental in these positivehuman development outcomes even thoughcorruption is shown by the CCI to beextremely pervasive in Bangladesh.

Even India, which has a middle rankingin the CCI, has seen significant fluctuationsin economic growth at a time when percep-tions of corruption have been relatively stable.Similarly, for Malaysia, which is consistentlyranked among the cleaner Asia-Pacific coun-tries, the growth and corruption outcomesseem unrelated: growth fluctuated between1997 and 2002, though the perception ofcorruption scarcely changed.

One can also put the growth-corruptionlink into some perspective by considering therise first of China and now of India as starglobal economic performers. Could they havegrown any faster in the absence of corruption?Indian economic growth was over 9 per centin 2006 and that of China has been over 10per cent over a prolonged period. Corruptionmay have hampered growth, but probably notmuch. It seems more likely that growth isconstrained by other factors – such as worldmarket demand, the rate of technologicaladaptation and the actions of global competi-tors. It can, however, be argued that even inthese countries growth will eventually lead tosystemic shocks – economic or political –which are less easy to manage in countrieshampered by high levels of corruption.

The Asian Financial CrisisThe Asian Financial CrisisThe Asian Financial CrisisThe Asian Financial CrisisThe Asian Financial Crisis

The most dramatic case of corruptioncontributing to an economic implosion wasthe 1997 Asian financial crisis. By now theproximate causes of the crisis are well known– related to the premature liberalization ofbanks and capital markets in the absence ofan adequate regulatory framework. The need


Corruption cantherefore not only

make countriesmore vulnerable to

crises but alsoreduce their

capacity to handlesuch crises

for greater caution was also hidden to someextent by many years of record growth, stableexchange rates and relative political stability– which generated a degree of euphoria.

For long-term foreign investors this wastoo good an opportunity to miss. Faced withrising labour costs at home they were happyto take advantage of new technological possi-bilities by relocating and outsourcing to Asia.They were also reassured by the fact thattheir governments had anti-communist anddefence alliances that reduced the likelihoodof sudden changes of regime and nationaliza-tion of foreign assets, even in countries wherethe state remained a key player in economicdecision-making.

The resulting flood of foreign capital,much of it short term, combined with theability of local firms to borrow cheaply off-shore in international capital markets createda dangerous but predictable bubble. Asbubbles are prone to do, this one duly burst –and in spectacular style, starting with thenosedive of the Thai baht on 2 July 1997, andgoing on to rock the world capital markets,with tremors being felt as far away as Russiaand Brazil.

This was a crisis exacerbated by ‘cronycapitalism’ which distorted the worth ofcompanies. The value of many companies hadless to do with economic fundamentals andmore to do with their political connections.Those that had managed to build strongrelationships with political leaders were ableto procure special privileges and licences andprotection against competitors. They alsofound it easier to get credit. Valuableresources thus went to those companies thatenjoyed special relations with governmentofficials rather than to those most willing topay for the license or who could achieve thehighest returns for a loan. With prosperitybased on firms that were well connected butinefficient, productivity inevitably declined.

This created an unstable situation sincepolitical connections can suddenly snap. InMalaysia, for example, in the initial stages ofthe financial crisis, the politically connectedfirms were among the hardest hit – thoughwhen capital controls were instituted follow-ing the crisis, the position of these firmsrecovered, corresponding to an increase in theexpected value of their political capital.36

Across the region, as the crisis continued,corruption also weakened governments’capacity to respond and to protect the poor.This was partly because money for socialbenefit programmes was stolen from publicfunds but also because social safety netprogrammes provided opportunities forcorruption among local governments andofficials and also allowed them to curryfavour with local interest groups who weregiven priority over more deserving house-holds. Local politicians were also able to sellrelief goods at rates above the subsidizedprices, and keep the remaining funds.Corruption can therefore not only make coun-tries more vulnerable to crises but also reducetheir capacity to handle such crises.

CorrCorrCorrCorrCorroding Toding Toding Toding Toding Tax Administrationax Administrationax Administrationax Administrationax Administration

One of the most important ways in whichcorruption distorts both the national economyand public investment is through the tax sys-tem. Some of the factors likely to influence theextent of corruption in the tax system are:37

Complexity. If the rules are complex and thelaws unclear, with multiple regulations andprocedures, then the taxpayers are likely tohave to interact with the system – andofficials will have more opportunities toextort bribes.

Rates. As tax rates increase, the motivationfor tax evasion also increases.


FFFFFigurigurigurigurigure 1.8: Contre 1.8: Contre 1.8: Contre 1.8: Contre 1.8: Control of Corruption and Tol of Corruption and Tol of Corruption and Tol of Corruption and Tol of Corruption and Tax Revax Revax Revax Revax Revenueenueenueenueenue

Note: Produced by the World Bank, the scores for the control of corruption index(CCI) range from –2.5 to 2.5; higher values indicate higher control of corruption;conversely, lower values indicate lower control over corruption.

Source: Gampat, Sarangi and Wickramarathne 2007.

There exists asimultaneousoccurrence of lowcontrol overcorruption and lowtax revenues forseveral Asia-Pacificcountries

Discretionary power of officials. The greater thediscretionary and monopoly power of taxofficials, the greater their scope for interpret-ing rules and regulations to their advantage.Without inadequate monitoring and report-ing, the result is likely to be more corruption.

Appeals system. If it is costly and time-consuming to file an appeal, taxpayers maybe motivated to ‘beat the system’. Indeed,some people may do so simply to signal howsmart they are, though the empirical evidencefor this is weak.

Enforcement. If taxpayers and officials believethat there is little risk of being caught orpunished they are more likely to engage incorrupt behaviour.

Level of remuneration. If the wage levels of taxofficials are low, they will be more tempted tosupplement them through corruption.

Overall governance environment. The extent ofcorruption in a given tax administrationgenerally parallels that in the administrativeenvironment as a whole – if that is corrupt,the tax system will be corrupt too.

Most forms of taxation are susceptible tocorruption, including value-added tax (VAT),which in many countries is now replacingother trade taxes. In Sri Lanka in 2006 theamount of VAT fraud has been estimated tobe 3.57 billion rupees.38 In VAT many of theopportunities arise in the credit and refundmechanisms which allow tax officials andbusinessmen to collude. There is also scope inthe system of VAT for false invoicing of trans-actions. In addition, studies suggest thatcauses of corruption in VAT may arise due tocredit claimed on purchases that are notcreditable, bogus traders and under reportedsales.39

The association between corruption andtax revenue is shown in Figure 1.8. If outliersare disregarded, the central message from thischart is that there is an association betweenthe capacity to control corruption and taxrevenue: lower values of the CCI – suggestingpoor control of corruption – are associatedwith lower tax revenues as a share of GDPand vice versa.40 The figure indicates thatthere exists a simultaneous occurrence of lowcontrol over corruption and low tax revenuesfor several Asia-Pacific countries.

Empirical evidence shows that countriesin the Asia-Pacific region perceived to havehigh levels of corruption also tend to havehigh marginal tax rates, both individual andcorporate. And the situation is worse if theyalso have multiple, burdensome procedures.One effect of this is that raising tax rates canlead to a fall in net revenue, partly because ofcorruption or because high rates drive busi-nesses into the underground economy.41 Theresult is that enforcement costs also go up andnet tax revenue goes down.


Figure 1.9: Human Development Index and Perceived Level of CorruptionFigure 1.9: Human Development Index and Perceived Level of CorruptionFigure 1.9: Human Development Index and Perceived Level of CorruptionFigure 1.9: Human Development Index and Perceived Level of CorruptionFigure 1.9: Human Development Index and Perceived Level of Corruption

Sources: UNDP 2006; World Bank 2007b.

Countries in theregion with higher

levels of humandevelopment alsodemonstrate low

perceived levels ofcorruption

Corruption and Human DevelopmentCorruption and Human DevelopmentCorruption and Human DevelopmentCorruption and Human DevelopmentCorruption and Human Development

While there has been fairly intensive study ofthe impact of corruption on economic growth,there has been less systematic research on itsimpact on human development. There arevarious channels through which corruptioncould cause damage. It is likely, for example,to corrode ideals of public service, so admin-istrations mired in corruption will also bethose less interested in investing in health andeducation. But even if corrupt governmentswant to increase investment in social services,they will find that corruption has loweredeconomic growth and weakened tax collection,leaving them with less to spend on welfareprogrammes.

Corruption is also likely to determine thecharacter of public investment. Corrupt offi-cials are generally less attracted to small-scaleprojects which involve a large number ofactors, and instead prefer to invest in largeinfrastructure projects that offer greateropportunities for collecting rents. This leadsto imbalances in the pattern of public expen-diture – away from key public goods such ashealth, education and environmental protec-tion, and towards new roads or airports ormilitary hardware.42 For example, they willprefer large infrastructure projects that aredifficult to monitor and the purchase of mili-tary and high technology goods rather thanongoing expenditure on health and education.

To get a better insight into the impact ofcorruption on the allocation of public expen-diture, one study conducted a cross-countryregression for around 100 developing coun-tries for the period 1996–2001.43 This con-firmed that corruption reduced expenditureespecially on education, health and socialprotection and affected the quality of services.

Other studies attempted to demonstratea more direct link with human development.One, using the transparency international

corruption perception index and the humandevelopment index, concluded that corrup-tion does indeed lower human develop-ment.44 Others have looked at components ofhuman development such as health care andeducation and demonstrated that corruptionboth raises the costs and reduces the qualityof service and thus raises infant mortality andschool drop-out rates.45 Further studies havesimilarly concluded that corruption reduceslife expectancy and literacy.46

The overall picture is illustrated inFigure 1.9 which shows, as might be expected,that the countries in the region with higherlevels of human development also demon-strate low perceived levels of corruption,as measured by the control of corruptionindex.

A closer look also shows that both scorestend to move in the same direction over time,as illustrated in Figure 1.10 which plots thechanges in human development over theperiod 1980 and 2004 against the changes inthe CCI over the period 1996 to 2006, show-ing that an improvement in human develop-ment is associated with a significant boost inthe control of corruption.


Figure 1.10: Change in Human Development Index and the Control of CorruptionFigure 1.10: Change in Human Development Index and the Control of CorruptionFigure 1.10: Change in Human Development Index and the Control of CorruptionFigure 1.10: Change in Human Development Index and the Control of CorruptionFigure 1.10: Change in Human Development Index and the Control of CorruptionIndex Among the Low- and Medium-HDI CountriesIndex Among the Low- and Medium-HDI CountriesIndex Among the Low- and Medium-HDI CountriesIndex Among the Low- and Medium-HDI CountriesIndex Among the Low- and Medium-HDI Countries


FFFFFigurigurigurigurigure 1.11: The Te 1.11: The Te 1.11: The Te 1.11: The Te 1.11: The Twwwwwo-Wo-Wo-Wo-Wo-Way Relationship Betway Relationship Betway Relationship Betway Relationship Betway Relationship Between Corruptioneen Corruptioneen Corruptioneen Corruptioneen Corruptionand Human Developmentand Human Developmentand Human Developmentand Human Developmentand Human Development

Notes: Corruption is embedded in the very fabric of society, a direct consequence ofhuman living in groups, communities and societies. Present in both public and private

sectors of the economy, corruption also has cross-border dimensions, which has become an issue withaccelerating globalization. However, various internationaland regional conventions and agreements couldmitigate the impact of cross-border factors that drivecorruption.

All three forms of corruption can be found in the publicsector – petty, grand, and state capture. Petty corruptionis widespread in poor countries where a large fractionof public services is delivered by the government –shortages, real or contrived, numerous gatekeepers andcomplex procedures create an incentive for corruption.The private sector, on the other hand, provides the spacefor grand and petty corruption. Depending upon thecircumstance, cross-border dimensions of corruption canbe linked to both sectors but the effect is the same:corruption becomes more entrenched.

The most telling and direct effect is on growth viainvestment. While there might be some short-term benefitfrom grease-the-wheel corruption, the long-term effecton growth is negative. Growth, in turn, affectsemployment, inequality and government revenue.Constrained government revenue presents seriousproblems for the delivery of public services (health,education, water, electricity). Employment, inequality anddelivery of public services are then linked to humandevelopment, which can also have an independent anddirect effect on corruption.

Source: Gampat 2007a.

Again, however, this does not indicatecausality. It could just as well be that higherlevels of human development help combatcorruption. The potential feedback links areillustrated in Figure 1.11.

The most obvious channel through whichhigher levels of human development wouldreduce corruption is through better standardsof education. Education empowers people todemand their rights and access to the servicesto which they are entitled, and also strength-ens their capacity to detect corrupt practicesand speak out against them. The correlationbetween perceived corruption and secondaryeducation is illustrated in Figure 1.12.


The poor also loseout since they have

less bargainingpower when there

is a general short-age of services,

public or private

The Effects on PovertyThe Effects on PovertyThe Effects on PovertyThe Effects on PovertyThe Effects on Poverty

Corruption in its various forms is also likelyto affect poverty. This has been confirmed,for example, in a global study which showsthat corruption tends to slow the incomegrowth for the bottom 20 per cent of thepopulation.47 As with human development,corruption slows down poverty reduction bylowering growth rates and reducing the effec-tiveness of social programmes. There is notmuch systematic evidence but it is wellknown that many of the goods and servicestargeted for the poor do not actually reachthem – instead finishing up in the hands ofwell-off and connected households who canafford to bribe the officials.

The poor also lose out since they have lessbargaining power when there is a generalshortage of services, public or private. Therich and the powerful can get the best dealsout of the existing stock either throughbribery, good connections or access to theopen-market. Thus while the poor are alreadyexcluded from various opportunities such ascredit and insurance because of marketimperfections, corruption erects a furtherbarrier. In addition the poor also lose outwhen they pay bribes. Even if they do so lessfrequently than the better off, the amountsthey pay generally represent a higher propor-tion of their income.48

Contours of the ReportContours of the ReportContours of the ReportContours of the ReportContours of the Report

The aim of this Report is primarily toconsider ways of countering corruption. Thefollowing chapters therefore give a briefsummary of the nature and extent of corrup-tion in some of the most important sectors,along with examples of anti-corruptionmeasures.

Chapter Two. In the Asia-Pacific region

Figure 1.12: Perceived Level of Corruption and Secondary EnrolmentFigure 1.12: Perceived Level of Corruption and Secondary EnrolmentFigure 1.12: Perceived Level of Corruption and Secondary EnrolmentFigure 1.12: Perceived Level of Corruption and Secondary EnrolmentFigure 1.12: Perceived Level of Corruption and Secondary Enrolment


corruption is seen to be highest in the policeand judiciary. This chapter considers howthis can undermine the position of the poor,both by harassing them and by denying themany means of redress. It also indicates waysin which the judicial system can be made moreresponsive and accountable.

Chapter Three. Poor people encounter corrup-tion in a wide range of services. This chapterlooks at health, education, water supply andelectricity, showing how both grand and pettycorruption reduce the funds available forinvestment in human development.

Chapter Four. When money, food, or othermaterials change hands there is always thedanger of ‘leakage’. This chapter looks at thepotential for tighter control during ‘specialdevelopment situations’ and when providingsocial safety nets for the poor.

Chapter Five. Some of the largest bribesconcern the exploitation of precious naturalresources – from oil to minerals to forestry.In this case the influence of the corruptorscan even amount to ‘state capture’.


Chapter Six. Tackling corruption meansworking simultaneously from the top downand from the bottom up. This chapter startsat the top looking at what governments needto achieve in terms of legislation, creatinganticorruption agencies, fulfilling the right toinformation and reforming their civilservices, as well as in cooperating with othercountries.

Chapter Seven. This chapter looks from thebottom up at what citizens can do to countercorruption when supported by the media andcivil society organizations.

Chapter Eight. This chapter distils from theanalysis of the Report, a 7-point agenda forchange.

There are no transcripts in Indonesian courts.And without a full transcript . . . how do youinvestigate court decisions properly?AMIEN SUNARYADI, VICE-CHAIRMAN OF THE CORRUPTION ERADICATION

COMMISSION (KPK), INDONESIA

CHAPTER 2: JUSTICE FOR SALE JUSTICE FOR SALE JUSTICE FOR SALE JUSTICE FOR SALE JUSTICE FOR SALE 4141414141

themselves may also have paramilitarydivisions, so the lines can be blurred. Never-theless the police in all countries have thesame core task: to protect citizens andprovide them with security of life and per-sonal property against potential threats fromothers. The police also serve as guarantors ofstate power, defending the state againstpotential, large-scale violent action orchallenges – as is evident in their presence atpolitical demonstrations.

Many of the officers carrying out theseand other tasks are honest and conscientious– trying to enforce the law fairly and toprotect citizens. But there are also others, whofor at least part of the time, have a differentagenda. In the rural areas, they may, forexample, be in the pockets of rich landowners


Justice for SaleJustice for SaleJustice for SaleJustice for SaleJustice for Sale 22222

Officials whoshould be

protecting peoplefrom abuse are

themselves often theworst offenders

Many people see the police and the judiciarynot as guarantors of their rights but assources of harassment and bribery, distrustand fear. The officials who should be protect-ing people from abuse are themselves oftenthe worst offenders. Small wonder that thepolice and the courts are often held in lowesteem. This is evident in Table 2.1, showingcomparative ratings in the Transparency In-ternational Global Corruption Barometer –which asks people for their assessment of theextent of corruption in various sectors ofgovernment, on a rating of 1 (not corrupt) to5 (highly corrupt). The answers were disturb-ing. In Asia-Pacific as a whole the mostcorrupt group were the politicians, but thepolice came in a close second and the judi-ciary not far behind. The situation appears,however to be worse in Asia than in thePacific where the judiciary is not consideredthat corrupt and is effectively independent ofgovernment. Compared with other regionsthe police are perceived as somewhat morecorrupt than those in Western Europe and inNorth America, though less than those inAfrica and Latin America.

Police CorruptionPolice CorruptionPolice CorruptionPolice CorruptionPolice Corruption

The most common daily interaction with thejustice system is through the police. Eachcountry organizes its forces in different ways.In some cases, in more remote and lawlessareas, for example, police-like tasks may becarried out by the army, though the police

In the Asia-Pacific region corruption is often at its worst in justice systems. Police, publicprosecutors, court officials, lawyers, judges – all can demand payments, sometimes not just fordoing their job but also for diverting justice from its true course.

TABLE 2.1PERCEPTIONS OF CORRUPTION IN JUSTICE SYSTEM,

BY GLOBAL REGION

Political Police Legal Educa-parties system tional

judiciary system

Asia-Pacific 4.0 3.8 3.3 3.1Africa 4.2 4.6 4.0 3.8South-East Europe 4.0 3.9 4.1 3.8EU and other Western Europe 3.7 2.7 2.9 2.3Latin America 4.2 4.2 4.1 3.0North America 4.2 3.1 3.5 2.9Former socialist states 3.9 4.1 3.9 3.8

Note: Transparency International’s Global Corruption Barometer measures people’sperceptions of corruption in different sectors/public institutions on a scale of 1 to 5.1 = Not at all corrupt; 5 = Extremely corrupt.



While corruption inthe police forcesin many respects issimilar to that inother publicservices, in thiscase it is oftenaccompanied byviolence

who can use the police to control theirworkforce or their tenants. In the cities, thepolice can be in the pay of large corporations,colluding with politicians and business inter-ests, and may be used, for example, to forcepoor people off their land to make way fornew developments. And the poorly paid lowerconstabulary, often living in slum-like condi-tions, with inadequate resources to carry outmain responsibilities or satisfy demands ofsupervisions, may feel pressured to seek‘extra curricular’ income.

In some instances police officers maysimply be working for themselves, extractingas much income as they can from their posi-tion of power. While corruption in the policeforces in many respects is similar to that inother public services, in this case it is oftenaccompanied by violence. The police canlegitimately use physical force in the pursuitof their normal duties and even direct thesame force against the innocent. Members ofthe public on the other hand have no suchrights; they are not permitted to resist evenan unjustified arrest using physical force.

The most common forms of policecorruption are:

Extortion. Police may, for example, apprehendsuspects whom they believe to be guilty of acrime, but rather than executing a formalarrest they may instead beat them up andforce them to pay for their freedom. Policecan also seize people they know to be inno-cent, and threaten them with arrest anddemand payment for release – which forwomen can often mean submitting to sexualexploitation. This type of extortion is mostcommon when the police have great freedomto arrest suspects and temporarily jail them,independently of the courts. The police mayalso act as local gangsters, threatening to in-flict harm against establishments or individu-als who are unwilling to pay for ‘protection’.

Mixed fraud and extortion. If the courts haveto be involved, as they normally are in largercases, police extortion is often combined withfraud – as in the classic case when the policeplant drugs in the pocket of the suspect. Asthe case proceeds through the judicial processthe price of freedom to be paid to the police orthe judicial system steadily rises.

Corrupt transactions. The police may illegallysell decisions such as not to report a trafficviolation, or not to register a crime. Or theymay offer to falsify reports by, for example,reducing the amount of drugs a dealer isrecorded to have been carrying when arrested,in order to reduce his punishment. Generally,the simplest and most lucrative option for acorrupt officer is not to arrest people who areknown to be guilty. For example, when prosti-tution is illegal, the police can charge sexworkers a regular fee for not arresting them,or perhaps in exchange for submitting tosexual exploitation. In some cases, however,it may well be the guilty party who initiatesthe process by offering a bribe. Another typeof corrupt police transaction is to sell infor-mation, such as a warning to illegal establish-ments about impending inspections.

Whenever police corruption is extensive,however, it tends to be linked with othercorruption networks. Some of these arewithin the police service itself which mayhave developed a hierarchical system fordistributing the proceeds of extortion up-wards through higher ranks of the force. Onthe other hand, much of the corruption actu-ally starts at the top when senior officers de-mand bribes for appointments or promotionsor for the most profitable postings. Senior of-ficers also tend to be part of wider networksof corruption within the justice system, withconnections with politicians, judges, lawyers,and prison guards, as well as with criminalgangs.


When victims invarious countries in

the Asia-Pacificregion were askedwhy they did not

report a crime,between one-thirdand three-quarterscited lack of trust

in the police

The Extent of the ProblemThe Extent of the ProblemThe Extent of the ProblemThe Extent of the ProblemThe Extent of the Problem

Some indication of the extent of corruptionin the Asia-Pacific region can be gathered fromsurveys of public perception, as shown inTable 2.1. But it is also possible to get moredirect indications from surveys of people’sactual experience. The Global CorruptionBarometer also asks respondents about theirinteractions with the police. In the Asia-Pacific region this survey found that 18 percent of the respondents claimed to have paida bribe to the police over the previous year,though this was a smaller proportion thanfound in Latin America or Africa (Figure 2.1).

Another more indirect indication comesfrom crime reporting and from crime victimsurveys. In most countries, victims tend toreport only a fraction of crimes. In Oceania,the proportion is relatively high, at 52 percent, close to that in North America, but inAsia it drops to 26 per cent.1 The victim’sdecision on whether or not to report a crimewill depend on a number of factors – anassessment of the likelihood of catching theperpetrator, for example, or the optionsoffered by local systems of justice, or therequirements of insurance companies. Butone key factor will be the victim’s views onthe efficiency and honesty of the police. Whenvictims in various countries in the Asia-Pacific region were asked why they did notreport a crime, between one-third and three-quarters cited lack of trust in the police.2

Among different branches of the policesome of the most frequent corrupt interac-tions are with the traffic police. In Cambodia,for example, one survey found that 89 percent of encounters with the traffic policeresulted in a bribe. Typically the paymentstended to be smaller amounts than those toother branches of the police. The average bribefrom a household was around $9. Bribesfrom businesses were about fifteen timesgreater.3

Similarly, in Sri Lanka, a surveyconducted in 2007 by the Centre for PolicyAlternatives, found that 45 per cent of peoplewho had interacted with the police due totraffic violations had to rely on ‘alternativeprocesses’ (paying more than what wasprescribed, paying someone for assistance, orusing influence). Of those who gave moremoney, three-quarters did so in responseto a demand, while the remainder did sovoluntarily.4 One typical case occurred in2004. The police stopped a citizen for drivinga vehicle with tinted windows, revoked hislicence and ordered him to go to the policestation to pay a fine. Here a grama-rakshaka(home guard of the village security personnel)told him his driver’s licence would bereturned if he paid a bribe of around $10.When the driver reported this to theTraffic Section, instead of disciplining thegrama-rakshaka, the sergeant said that hislicence would be returned only if he paid hisgrocery bill of $54.5

Police also often demand bribes fromlong-distance truck drivers. One study, inIndonesia, involved accompanying truckers inlong inter-provincial journeys that encoun-tered multiple police checkpoints. Bribeexpenses at these checkpoints constitutedaround 13 per cent of the transportation costwhich, though less than the fuel cost, is a

Figure 2.1: Respondents Who have Paid a Bribe to the Police, by Global RegionFigure 2.1: Respondents Who have Paid a Bribe to the Police, by Global RegionFigure 2.1: Respondents Who have Paid a Bribe to the Police, by Global RegionFigure 2.1: Respondents Who have Paid a Bribe to the Police, by Global RegionFigure 2.1: Respondents Who have Paid a Bribe to the Police, by Global Region



little more than the wage cost.6 Similarly areport in Bangladesh found that a cattletrader had to pay extortion money at eightdifferent places along the way to the market,both to the police personnel and organizedcriminals – which added 15 per cent to 20per cent to the selling price.7

Impact on the PoorImpact on the PoorImpact on the PoorImpact on the PoorImpact on the Poor

The poor are the most vulnerable to policecorruption because they lack the influenceneeded to defend themselves when they getinto difficulties. Although the sums extortedby the police are relatively small theyconstitute a significant proportion of theincome of poor people – as well as creating anatmosphere of fear and apprehension. Mostanalyses of corruption do not, however,include the impact on the poor. This may bebecause it involves relatively small amounts,and is difficult to measure, and also becausethe victims have little power to complain.

One example in Cambodia, for example,involved a rural family who owned a smallboat but not the land where their house waslocated. The wife reported that sometimes thepolice came when her husband was out fish-ing and although they did explain why theywere visiting her, she at times felt forced togive them money, out of fear of losing theboat.8 The police will generally monitor therural space for which they are responsible anduse this information to identifying the mostvulnerable families they can extort.

Among those greatly exposed to harass-ment by the police are street vendors. Manypeople working on the streets do so withoutofficial recognition and even when they haveprotection from appropriate legislation thisis not always implemented. As a result,across the region street vendors are frequentlyharassed by the police. If they do not pay up,they are likely to see their goods confiscatedor destroyed.9 One well publicized case

occurred in 1996 in Delhi, India. A fruitvendor belonging to a minority communitywas beaten to death by two policemen mainlybecause he had failed to pay the hafta – aweekly collection made by the police topermit petty vendors to carry on their activi-ties. The incident attracted a lot of attentionand action was taken by the department toprosecute the guilty police officers afterpressure from the public. The NationalHuman Rights Commission asked the govern-ment to pay a compensation of INR Rs 2.5lakh10 to the next of kin and to take mea-sures to curb the menace so that ‘thisvulnerable section of society can live in peace’.The Commission subsequently received areport from the Government of theNational Capital Territory of Delhi indicat-ing compliance with the directions of theCommission.11

Police can also harass whole neighbour-hoods. In a riverside slum settlement inNorthern India poor families described toreporters how police were fleecing them:‘They have made our lives miserable. We donot know when we will be thrown out of ourhomes. They land up any time and demandmoney. They threaten us that if we do notpay, they would throw us out of our homes.. . . Last week my clothes were torn apartafter my husband could not pay the moneydemanded. We were allowed to go free onlyafter we sold our rickshaw and paid themoney’.12

On the other hand, poor people are lesslikely to receive any attention if they want toregister a complaint. For poor and disadvan-taged people in many countries in the Asia-Pacific region, non-registration of theircomplaints is one of the most common andwidespread grievances. While this maysimply be due to indifference to the needs ofthe complainants it can also be the outcomeof corruption if those accused can pay thepolice to ignore their crimes.


SPECIAL CONTRIBUTION – COMBATING CORRUPTION IN CRIMINAL JUSTICE AGENCIES: THE INDIAN SCENE

By R.K. Raghavan

statistical approach in assessing policeperformance. But this calls for politicalwill and no political party likes to admita rise in crime when it is in office.

A major factor behind police corrup-tion in India is the falling level ofintegrity, especially at the level of eliteofficers drawn from bright universitygraduates. While a module in ethics isnow part of the curriculum at theNational Police Academy in Hyderabad,this seems not to have yet brought aboutthe desired improvement in values.Deterrence in the form of criminalaction under the Prevention of Corrup-tion Act 1988 is one response that hasbeen tried, with modest success. In arecent case, a former Commissioner ofPolice was arrested and prosecuted oncharges of involvement in a nationwidefraud scheme. This officer has sincebeen acquitted but the fact he wassuspected of malfeasance at all is oneindex of the perception of declininglevels of integrity in the Indian police.

The frequent transfer of criminalcases from the state police to theCentral Bureau of Investigation (CBI),India’s highest investigating organiza-tion, on complaints of lack of policeintegrity offers another index of thechallenges facing police credibility in thestates. CBI has limited resources andcannot handle too many cases, but thismethod of judicial intervention canensure straightforward criminal investi-gation in sensitive cases. Likewise, theSupreme Court has ordered the creationof a Police Complaints Authority.Although this is intended primarily tooversee cases involving alleged policebrutality, this body also could look intocharges of corruption and must be imple-mented in more states.

At the same time, it is widelybelieved by the public – and has beenadmitted by a few Chief Justices them-selves – that the judiciary is not freefrom corruption. Fortunately, thismalaise is almost wholly confined to thelower judiciary, which hears the lessgrave cases of crime. There is, however,

India has won global praise for itsrobust economy and its wider mediacoverage of the ways in which publicservants function. ‘Sting’ operations toexpose corruption are the order of theday. But amid these very positive deve-lopments, not only are visible signs ofincreased ethical standards few, but anattitude of resignation to entrenchedgraft also prevails.

Nowhere is this more evident thanin the Indian criminal justice system,where the police and judiciary arecrucial points of public contact. Thepolice, as the first point, constitute thecutting edge in offering needed relief toa person in distress. Yet it is here thatthere have been the most vociferouscomplaints of corruption for decades.Without the offer of a bribe, fewvictims of crime get their cases regis-tered as a ‘First Information Report’, thestarting point of investigation under thelaw. Misdeeds may even be suppressedby corrupt officials, often with a view ofcirculating the false impression thatcrime is under control, when it is not.

There are, however, successful waysto deal with this. Increasing manpowerat police stations, the fundamental unitof policing, will help, but it is notenough. Simultaneously, police staffshould also be relieved of responsibilityfor public order maintenance, specificallyfor the protection of dignitaries, popu-larly known as ‘VIP security’. Severalreform bodies, including the NationalPolice Commission itself, have long re-commended that such work be assignedto specialized units, an arrangementunder which a police station will thenbecome purely a service centre for theaverage citizen. The separation of lawand order police and crime investigationunits was ordered by a Supreme Courtjudgement in September 2006, however,this has been only partially implementedin many Indian states and must befurther strengthened.

Suppression of crime through themanipulation of figures also decrease ifa qualitative evaluation replaces a

a growing feeling that the canker isspreading upward to the higher courtsof the states. The major factor thatpromotes judicial corruption is themind-boggling volume of work, whichresults in the pending of cases for years,sometimes for more than a decade. Judi-cial discretion to prolong trials is wide,through adjournments sought by defen-dants for the flimsiest of reasons, whichis conducive to corruption. The appoint-ment of unqualified judicial officials,purely on political and non-legal consid-erations, to prosecute cases on behalf ofthe State marks another negativefeature of the scene.

A provision in the Constitution seeksto ensure judicial integrity, but enforce-ment has been at times futile, reinforc-ing a sense of public resignation. In onecase, a Chief Justice was tried forimpeachment in the national Parliamenton charges of grave impropriety. Themotion failed because the issue becamemired in controversy, with the judge inquestion being supported by one politi-cal group on partisan grounds. Creationof a National Judicial Council to lookinto complaints against judges, in addi-tion to other matters like appointments,is another non-starter because of diffe-rences of opinion between the centralGovernment and the judiciary.

To counter all this, in some instancesHigh Court Chief Justices and judgeshave been transferred from one state toanother in a device tried by the SupremeCourt to neutralize partisan judgesagainst whom complaints of corruptionhave been levelled. Still, this remains astopgap measure. Ultimately, it is onlythe appointment of people of unimpeach-able integrity that will at least partiallyensure judicial and police uprightness.

R.K. Raghavan is a former Director ofCentral Bureau of Investigation, NewDelhi. He is currently a leading consult-ant in the area of cyber-security andwrites two fortnightly columns for ‘TheHindu’, a wellknown English-languagenewspaper group.


Police corruption can also have significantgender implications. According to a 2007survey in Sri Lanka 78 per cent of the femalerespondents said that if they had to go to thepolice station for any reason they would likesomeone to accompany them, while only 32per cent male respondents said that theywould ask a friend to accompany them.13

Typical cases in South Asia involve victimsof rape. Such cases do not often get reported.One case that made it to the press inPakistan, for example, involved a rape victimwhose father tried to file a case at the nearbypolice station, to no avail. Almost ten weekshad passed, but no action had been taken. Shealleged: ‘Some influential people are threat-ening us with severe consequences’.14

TTTTTackling Packling Packling Packling Packling Police Corruptionolice Corruptionolice Corruptionolice Corruptionolice Corruption

Police corruption is difficult to address sincethe police can easily discover that they are underinvestigation and may be in a position to in-timidate witnesses and destroy documents.They can also usually rely on the support ofpowerful political patrons. One of the mostimportant steps therefore is to ensure thatcomplaints against the police are dealt withby a truly independent and accountable body.

Independence is a necessary condition butit is not sufficient. In fact, in Hong Kong(SAR), China the Commission’s headquar-ters was in its early days surrounded andstormed by outraged police, forcing the Com-mission to reach a compromise on prosecu-tions of many officers, and in 1977 itsinvestigations provoked a mass police walk-out. In different circumstances, such incidentsmight have killed off the fledgling agency.However, the critical element was publicdetermination: the people of Hong Kong(SAR), China were not prepared to go backto the old days. They would no longeraccept that policing had to be corrupt and

contrary to their interests. With overwhelm-ing support, constant media attention andintense pressure from all quarters, reformsultimately proved a success; today Hong Kong(SAR), China has one of the most efficientand law-abiding police forces in Asia.

Similar efforts have been made in othercountries. In Malaysia, for instance, the RoyalCommission to Enhance the Operation andManagement of the Royal Malaysia Policesubmitted its report to the Prime Minister inApril 2004. One of its key recommendationswas to establish an Independent PoliceComplaints and Misconduct Commission,though by the first half of 2007 this had yetto be established.15

Other solutions involve changing thestructure of police forces to make them moreefficient and responsive – applying rigidrecruitment criteria, reallocating individualsacross tasks, modifying transfer patterns,carrying out an ethical evaluation of thosewho are up for promotion, and attemptingchanges in policing styles. The overall inten-tion should be to create more professional andeffective police forces that allow individualofficers to take greater pride in their work –so that they think primarily about fulfillingtheir responsibilities.

Corruption may also be reduced by invest-ing more in the police forces. In Karachi,Pakistan, for example, the Citizen-PoliceLiaison Committee (CPLC) has served as abridge between the community and the policeand has helped increase awareness of thefinancial constraints and to raise resources toimprove working conditions in police stations.The CPLC has contributed to improvedperformance, including providing access tojustice for the poor, offering poor people analternative mechanism for registering crimi-nal complaints, as well as acting as a forumfor dispute resolution for those who cannotafford costly judicial processes.16

With overwhelmingsupport, constantmedia attention andintense pressurefrom all quarters,reforms ultimatelyproved a success


Another option, depending on the coun-try context, is to decriminalize and requlateactivities that commonly serve as sources ofincome for the police – in some countries itmay be possible to look again at legislationthat prohibits widely practiced social activi-ties, such as the consumption of alcohol.

It should also be possible to reduce theimpact of police corruption by strengtheningthe rights of suspects. This would include theright to call relatives about arrests or policeconfinement, which is becoming more practi-cal with the increasing number of mobilephones.

People should also be better informedgenerally of their rights and responsibilities.In 2005, Pact Cambodia, an internationalNGO in cooperation with local NGOs, triedto raise awareness among citizens on how toreduce corruption in the traffic system. Theyemphasized that fighting corruption was theresponsibility of every citizen and explainedwhat citizens could do to reduce corruption.They listed, for example, the documents thatpeople had to carry while driving – whichdiffer for family cars, trucks and buses andmotorcycles – and detailed the fines thatpeople driving each type of vehicles were offi-cially required to pay for any traffic violation.

In addition to responding more appro-priately to gender-related crimes, it is impor-tant that women should be able to count onspecial protection. In the Philippines, forexample, police stations now have a ‘womenand children concerns desks’ which havehelped provide services and protection to thevictims of abuse and violence while also help-ing to improve police-community relations.17

Judicial CorruptionJudicial CorruptionJudicial CorruptionJudicial CorruptionJudicial Corruption

Most people have fewer contacts with thecourts than with the police, but these canprove just as difficult and even more expen-

sive. Ideally, courts should be the place whereall kinds of disputes can be settled fairly anddispassionately, where judges operate freefrom any political or commercial pressures,settling cases only on the basis of evidence.Indeed there are many examples where,against considerable odds, courageous andprincipled judges particularly the higher judi-ciary do uphold the laws and constitutions oftheir countries, delivering judgements thatcorrespond with national legislation and theprovisions of the constitution.

This is not always so. Even judges whowant to uphold ethical principles may findthemselves subject to heavy pressure. Oftenthis comes from the top, as judicial proceed-ings are distorted by political intervention.Judges can be leaned on by powerful politi-cians to rule in their favour, requiring thecourts to provide legal cover for various typesof illegal activity – from land grabbing, tonepotism to a range of other dubious commer-cial transactions such as privatizationprogrammes designed to benefit political orbusiness cronies.

Judges typically come under the heaviestpressure when handling cases that are politi-cally sensitive: for example, the prosecutionof former political leaders for corruption orother crimes, or of other high-profile figureswho have a wide popular following, whenthey will be expected to make a politicallyacceptable ruling.

Most people, however, encounter corrup-tion in the judicial system at lower levels. Anumber of studies across Asia have foundthat two-thirds or more of the populationconsider the routine court system to becorrupt, and admit that they themselves willpay bribes, regardless of whether they areguilty or innocent. A household surveyconducted by Transparency InternationalBangladesh in 2005 found that two-thirds ofthe respondents who had used the lower tiers

Even judges whowant to uphold

ethical principlesmay find themselves

subject to heavypressure


of courts in the preceding year paid averagebribes of around $108 per case. This amountsto about a quarter of the average annualincome in one of the world’s poorest coun-tries.18 Once people feel that the law issuspect, and that the outcome will turn onwho pays the most, even innocent partiesbelieve they will have to bribe to achieve a‘fair’ result. Recognizing this issue, inPakistan in 2007, the National Judicial PolicyMaking Committee (NJPMC) called for zerotolerance towards corruption in the lowercourts. The committee, which has been estab-lished to coordinate and harmonize judicialpolicy within the court system and to ensureits implementation, in September 2007 askedthe high court authorities to make frequentsurprise checks on lower courts.19

Forms of Judicial CorruptionForms of Judicial CorruptionForms of Judicial CorruptionForms of Judicial CorruptionForms of Judicial Corruption

Corruption can emerge at all stages of thejudicial process from the initial arrest to thefinal sentencing to the assessment of theperiod of imprisonment. Indeed, runningparallel with the more formal judicial processthere can be an ongoing negotiation betweenlawyers, judges and others on the size of therequired payment – which tends to increasesteadily as the case proceeds.

Police discretion. Initially the decision to arrestwill depend largely on the police who in manycases are open to bribery. The police may alsodecide on whether complaints that arebrought to them should be investigated,often requiring payment just to registercases.

Prosecution decisions. In some countries thedecision whether or not to bring a case willrely on a public prosecutor. This post doesnot usually carry a very high salary, but isvery powerful and much sought after.

Trial dates and timing. Court officials may bebribed to get favourable dates for the hearing.Judges may be bribed to ensure that cases areheard promptly rather than subjected toendless adjournments.

Evidence. The police may tamper with theevidence, court officials can be bribed to ‘lose’files, and judges may admit or excludeevidence according to which party has paidthe most.

Verdicts. Once a judge has been ‘bought’ thereis little hope of a fair trial. A bribed judge willoften simply distort the testimony ofwitnesses in their summaries and give thecorresponding judgement. Even if the verdictis inevitable the subsequent sentencing maybear little relation to the severity of the crime.

What Makes a System CorruptWhat Makes a System CorruptWhat Makes a System CorruptWhat Makes a System CorruptWhat Makes a System Corrupt

Judicial corruption in many respects is justanother aspect of a weakly functioning state.In many countries politically motivatedbodies appoint or promote judges accordingto their own requirements, so that the judi-cial system becomes just another arm of theexecutive. Such judges are more inclined tobend to the wishes of their political mastersthan to guarantee justice or protect the rightsof citizens.

Weak judges may also yield to other pres-sures. Some may, for example, consider itmore important to support a relative or asso-ciate than to uphold the rule of law. They mayalso fear retribution – sometimes in the formof violence. In addition to lack of economicsecurity, judges may in countries such asAfghanistan, suffer from a lack of physicalsecurity.20 But they may also be concernedabout reactions from other branches of gov-ernment, which can bring bogus charges orforce ‘awkward’ judges into early retirement.

Recognizing thisissue, inPakistan in 2007,the NationalJudicial PolicyMaking Committee(NJPMC) called forzero tolerancetowards corruptionin the lower courts


Although there aremany courageous

and honest judgeson low salaries,

low pay maycontribute to

corrupt behaviour

A further issue is low salaries. Explain-ing why Singapore’s judges are paid high sala-ries, the former President, Lee Kuan Yu said:‘you pay peanuts, you get monkeys’.21

Although there are many courageous andhonest judges on low salaries, low pay maycontribute to corrupt behaviour. In manycountries salaries of judges, particularly thosewho work in rural areas, are so low that theyfrequently earn much less than the peoplethey are giving judgment on, and often lessthan practicing lawyers. While on duty,judges may get housing and transport givingthem a higher standard of living than thataffordable on retirement – tempting them toacquire some funds for the future.

Unquestioned power of the judiciary canalso be a source of potential corruption, evenas it protects its independence. In most coun-tries where judicial independence is institu-tionalized contempt of court laws not onlyinsulate the judiciary from the legislature andthe executive, they also keep it from mediascrutiny.22 Such laws prevent anyone –elected representatives, officials, media,citizens – from doing or saying anything thatis seen to lower court authority. As a result,even when a judgment is suspected of beingbased on extraneous considerations, it cannotbe adversely commented upon openly. Fewwould risk undergoing a criminal trial, includ-ing the possibility of a prison sentence, forcommenting on a judicial decision. This endsup gagging the media. In India, for example,where contempt of court is taken seriously,until last year even truth was not considereda valid defense. A few instances of alleged highlevel judicial corruption have resulted in adebate on the matter.


The poor will suffer from a corrupt legalsystem primarily because they cannot rely onit for protection. A 2003 UNDP study of

rural justice in Pakistan, for example, foundthat people in poor villages were reluctant toengage with the formal legal system becausethey viewed the police and courts as luxuriesfor the rich. Rather than getting involved withthe formal legal system they would prefer touse more informal systems of dispute resolu-tion. Though quicker and cheaper suchsystems may not necessarily be fairer.23

Second, the poor suffer because withoutbeing able to afford to defend themselves theyare subject to arbitrary judgements that cancause them to lose their land, homes, orlivelihoods.

A study in Bangladesh of 3,000 house-holds shows that 97 per cent of householdsthat bought land had to pay bribes for landregistration, 88 per cent of the householdswho mutated their land ownership had to paybribes for it, 85 per cent households whocollected land related documents had to paybribes, 83 per cent households had to paybribes for land survey, and 40 per cent house-holds who received land had to pay bribes.24

Corruption tends to compound the otherfactors that prevent the poor from gettingaccess to justice. Often the poorest people livein rural areas far from the courts and havelittle knowledge of how they work. In addi-tion they are unlikely to have the funds topay for an experienced lawyer. In Bangladesh,one woman narrated to Transparency Inter-national her experience about a murderconviction of her seven-year old boy. Whileplaying he threw a ball which hit the chest ofanother boy who subsequently died. The courtsentenced him to several years in prison. Hismother lacked the funds to bribe court offi-cials or to engage good lawyers, and relationsof the dead boy evicted her from her home.Although poor families should be able to relyon the support of bar councils and govern-ment funds, she was unable to enlist any suchhelp. Fortunately at a later date she receivedthe backing of a human rights group.25


in countries where no political willexists to fight corruption. There will beno political will where charges are likelymade against people who are powerfuland part of, or supporters of, theGovernment.

Third, is cultural practices. Fiji hassocieties that are traditional, authorita-rian and patriarchal. Some of theaccused were traditional leaders as wellas Government officeholders. Chargeschallenged the traditional practice of giftgiving, and of traditional favoursexpected and received. This was seen aschallenging a whole community’scultural identity. Prosecutors wereaccused of cultural insensitivity, but thisobscured the real issue: whether theaccused had acted corruptly.

Fourth, is delay. Delay is destructiveto prosecution. Witnesses, in any event,reluctant to testify against those inpower, renege or disappear. Often, theyforget evidence. Delay leads to applica-tions made by the accused to travelabroad, to appeals from interim rulingsand to applications for a permanent stayof the prosecution. This happened in anumber of fraud and corruption trials inFiji, including several of the NationalBank cases. The result was a failure toair the substance of the charge ofcorruption.

Fifth, is personal attacks. Members ofthe bench threatened several prosecutorswith contempt proceedings. Two werecited, and one was detained in the cell

Uprooting Judicial CorruptionUprooting Judicial CorruptionUprooting Judicial CorruptionUprooting Judicial CorruptionUprooting Judicial Corruption

Much of the responsibility for reducing judi-cial corruption lies with the judges them-selves. Judges in many countries have found apowerful voice by joining an association ofjudges to represent the interests of all judges– particularly lower court and district judges,whose opinions are rarely heard. This canprovide a potential for setting norms andstandards and abiding by them.

Contd...

SPECIAL CONTRIBUTION – PROSECUTING CORRUPTION: A PACIFIC PERSPECTIVE

By Hon. Madam Justice Shameem

regulations and legal rules broke downor were compromised. The NationalBank was asked to process ‘soft’ loansto indigenous Fijians as a form of affir-mative action. For six years, millions ofdollars were advanced with no orinadequate security. Law firms createdshelf companies to siphon off funds andchannel them abroad to unseen,unknown recipients.

The National Bank’s board said it didnot know what was happening. TheReserve Bank did not know. TheCabinet did not know. The Minister ofFinance did not know. Eventually, themedia informed the public that theNational Bank was owed $200 million,which it would probably never recover.Police investigations revealed thatrecipients were neither all indigenousnor financially disadvantaged, uncover-ing cronyism, dishonesty, fraud andcorruption. Cabinet Ministers, lawyers,accountants, civil servants and businessinterests all benefited.

We started to issue charges. Theaccused were all prominent members ofthe establishment. The effects wereimmediate: first, the hostility of thejudiciary. When lawyers are challenged,members of the bench are not alwaysable to consider their cases impartially.The principle of equality before the law,so intrinsic to the rule of law, is mostseverely tested when we try one of ourown.

Second, the inadequacy of our laws

The abuse of entrusted power forprivate gain is a habit. It is found in allcountries, rich and poor, developed andunderdeveloped. It is found in all socie-ties and ethnic groups. All that differs isthe degree and type of corruption. In ademocratic society it is easier to spot,but corruption exists in democracies anddictatorships alike. Wherever there ispower, there exists the potential forpower to be abused.

For 16 years before I became a judge,I was a prosecutor, and for five of thoseyears I was Fiji’s Director of PublicProsecutions. My experiences taught methat to deal with corruption effectively,you need good laws, a strong and inde-pendent judiciary, an independent andwell-resourced prosecutors’ office, aswell as a determined police force.

But that is not all. The prosecutorhimself or herself needs to developimmense resolve, a thick skin, excellentresearch and advocacy skills, along withthe ability to look dishonesty andcorruption in the face and say, ‘This isdishonesty and corruption’. Corruptioncases need prosecutors who will carryon even when they lose and lose again,and who will recognize that victory isin trying.

A story I have often told is of thecollapse of the National Bank of Fiji.Fiji had its first military coup in 1987,said to be conducted to protect indi-genous Fijian interests. In the after-math, Government procedures, bank

The general principles that judges shouldfollow have been codified in the ‘BangalorePrinciples’. In 2000 a group of senior judgesfrom Africa and Asia met in Bangalore andlisted six core principles: independence,impartiality, integrity, equality, propriety andcompetence and diligence.26 These have sincebeen endorsed by a number of internationalbodies – the UN Commission on HumanRights in 2003, the UN Commission onCrime Prevention and Criminal Justice in


In Malaysia, for example, in September2007 the Malaysian Bar Association orga-nized a peace march to express concern aboutthe state of the judiciary and to demandinvestigation into the authenticity of a videoclip featuring what appears to be a well-connected senior lawyer purportedly discuss-ing promotions and factionalism amongsenior judges over the phone with the numberthree judge in the country at the time. Theclip was recorded on a mobile phone in 2002.The marchers also to handed over a memo-randum to the Prime Minister’s office callingfor the setting up of a Royal Commission ofinquiry into the controversial video clip, aswell as a Judicial Appointment Commission.

Contd...

April 2006, and by the Economic and SocialCouncil of the UN in July 2006.27 The impor-tance of the Bangalore Principles has also beenrecognized at the national level. In 2004 thePhilippines introduced a new code of judicialconduct for the Philippine Judiciary patternedafter the Bangalore Principles.

Lawyers too can contribute, especiallythrough bar associations. One important roleof a national bar association is to defend theindependence of judges and to lobby govern-ments to provide the support necessary toensure their effectiveness. Bar associationscan also impose sanctions on members whoengage in corruption and bring the professioninto disrepute.

after feelings had run particularly highin court. Those were the direct attacks.The indirect attacks were those withinthe civil service machinery, the lack ofcooperation, the abusive memoranda,the ostracism. Only those who live in asmall community will understand theeffectiveness of the social cold shoulder.When prosecutors take on the rich andinfluential, their children will be abusedat school, threatening letters will bethrown over their gates, old friends willcross the street to avoid talking to them.I suffered all of these, as did otherprosecutors. We developed the art of thesphinx-like stare.

Lastly, is the opposition of the execu-tive. An independent prosecutor is apotential challenge to a government thatdoes not believe in accountability.Attempts will be made to subdue thatindependence, ensuring some executivecontrol. The Government of Fiji tried toforce me to agree to report to thePermanent Secretary for Justice. Irefused, but the pressure was immense.Together with the personal attacks, thejudicial battles, the legal challenges andthe political apathy, these pressuresdefeated the prosecutions.

I see the solutions very clearly,having failed to obtain a single convic-tion in relation to the National Bank

corruption case. A country determinedto fight corruption must have the politi-cal will to change laws, to change thestructure of government institutions, tonot tolerate corrupt conduct and to allo-cate resources to investigate andprosecute corruption.

How do we persuade governments todevelop political will? First is throughincreasing media consciousness aboutwhat is corrupt conduct and how thecriminal justice system should bestrengthened. Second is through theinvolvement of civil society, which usesdemocratic means to pressure govern-ments to pass anti-corruption laws andcode-of-conduct legislation. The otheradvantage of a greater civil society voiceis that it creates public consensus aboutthe need to resist corruption, which inturn persuades witnesses that testifyingagainst corruption is an act of courageand a social responsibility. In a democ-racy – indeed, in any country – therecan be no greater voice than that of thepeople.

Furthermore, all state institutions ina democratic government must bestrengthened. These institutions, whenweak and corrupt in themselves, under-mine democracy. They undermine therule of law. They perpetuate the falsebelief that all is acceptable. Corruption

must be prosecuted by strong, well-resourced and independent law enforce-ment bodies. These institutions are tooeasy to manipulate and subvert, often inthe name of freedom and democracy.

Lastly, anti-corruption agencies musthave an educative role. Cases must befought in an open court, under the glareof public scrutiny. One glimpse of acultural or government leader in thedock teaches society more about the ruleof law than a series of law lectures atthe university. In such cases, the mediamust inform, monitor and report with-out losing objectivity.

Prosecuting corruption is difficult butthe solutions are apparent to those whohave been at the front lines andsurvived. A failure to achieve thosesolutions, or to work towards them, willresult in the failure of the rule of law.

The Hon. Madam Justice Shameem is ajudge of the High Court of Fiji, a positionshe has held since 1999. She was Fiji’sDirector of Public Prosecutions from 1994to 1999, after prosecuting for 10 years. Sheholds law degrees from Sussex University,and Cambridge University, and is abarrister of the Inner Temple, London.Her special interest lies in the law offraud and corruption and in children’srights.


The Government was responsive to theirrequest and announced the setting up of anindependent panel to investigate the videoclip. While welcoming this first step, the BarCouncil continued to ask for a broader inter-vention, namely for a Royal Commission tolook into the state of the judiciary and theneed for a Judicial Appointment Commission.28

Journalists also have a role to play as theycan report cases of public interest. Allowingpublic access to courtroom proceedings canimprove journalists’ often shaky grasp on thelegal ramifications of a case, improving publicperceptions of the judiciary. In many juris-dictions the problem is not sensationalistreporting by journalists, but rather theobstacles that make it difficult for the mediato report allegations of corruption. Somerecent efforts undertaken by the media, suchas a hit and run case and a media analysiscomparing the lifestyle of judges to the size oftheir salaries (thereby exposing the account-ability gap) have attempted to improve theadministration of the judiciary.29

Judicial reform programmes involve awide range of measures that can help reducecorruption. These include:

Budgeting. To protect judicial independence,for instance, budgets for the courts could be acharged item to minimize political inter-ference. Independent judicial councils couldalso present budget proposals directly toparliament. Specifics would depend upon thelocal context.

Contempt of court laws. In most jurisdictionsdisobedience of a court order constitutescontempt of court. But who will judge thejudges or check their power? A possible waycould be to codify laws on contempt or dropthem altogether. Alternatively, a body could be setup for self-regulation by judges guided by barassociations, senior lawyers and former judges.30

Appointments. Judicial appointments shouldbe made by independent bodies with repre-sentatives from the legal system as well asfrom civil society. In the Philippines, forexample, under the Action Programme forJudicial Reform launched in 2000, severalcitizen watch groups were formed to monitorthe selection of the chief justice, ombudsmanand election commissioners.

Salary and working conditions. Judges shouldhave salaries that match their experience andqualifications and they should be offered allnecessary protection for their security. Todeal with case overload and provide betteraccess at the lower level, the number ofbenches could be increased.

Security of tenure. Judges should serve fixedterms, for ten or more years, and should notbe removed for reasons other than profes-sional misconduct.

Promotion. Systems of promotion should bemerit-based, rewarding those who haveupheld the integrity of the law.

Education and training. This should allowjudges to gain an understanding not just ofthe law but also of ethical standards and ofways to resist external influences. This wouldhelp reform the organizational culture withinthe judiciary.

Random case assignment. Cases should beassigned on objective criteria and judgesshould not work in courts where they haveties with local politicians.

Transparent procedures. Cases should gene-rally be heard in public and judges should berequired to give written reasons for theirjudgements. Courts can also be subject toindependent monitoring. In Cambodia, for

Systems ofpromotion shouldbe merit-based,rewarding thosewho have upheldthe integrity of thelaw


example, since 2003 the Center for SocialDevelopment has been monitoring courtproceedings through its the Court WatchProject. Similarly, in the Philippines, underthe Action Programme for Judicial Reform,the NGO Bantay Katarungan has been moni-toring court proceedings and the screening ofapplicants for positions in the regional trialcourts and courts of appeals. As a result,between 1998 and 2001, the Supreme Courttook disciplinary action against judges forgraft and corruption.31

Use of information technology. Transparencycan also be enhanced by making much greateruse of information technology. The MalaysianGovernment, for example, has decided toexpand a pilot e-judiciary project thatprovides the judiciary and governmentagencies such as the police with easier accessto court documents. In addition to enhancingtransparency and accountability, compu-terization of the courts should help in provid-ing speedy, high quality and cost-effectivejustice, while also reducing corruption andharassment. In India the introduction in1998 of ICT in court management hasreduced the huge backlog in the SupremeCourt. Encouraged by this the Governmentnow has a five-year plan to computerize thenational justice delivery system. This willinclude computer rooms in all 2,500 courtcomplexes, and official laptops and trainingfor 15,000 judicial functionaries.32 Viet Namtoo has been making greater use of ICT. In2001 the Office of the National Assembly(ONA) compiled a database covering 12 legalareas, more than 250 legal documents andmore than 1,300 questions into a CD-ROMcalled ‘Your Lawyer’. This has been distri-buted to delegates to the National Assemblyin all 61 provinces, offices of people’scouncils, and media organizations, as well as

being available on the internet. In addition,the ONA has developed ‘Lawdata’, a compre-hensive database collecting legal documents inVietnamese and containing more than 11,000documents which are updated frequently.

But ultimately, governments need todemonstrate the political will to root outcorrupt judges. In China in 2006, forexample, one case involved three top judgesfrom Fuyang Intermediate People’s Court inEast China’s Anhui Province, who werearrested for taking bribes. Two weresentenced to 9 and 10 years imprisonmentrespectively, with the other one still on trial.Another case involved five senior judges fromShenzhen’s Intermediate People’s Court inSouth China, three of whom were sentencedto jail terms ranging from 3 to 11 years.33

Not for SaleNot for SaleNot for SaleNot for SaleNot for Sale

Across the region, corruption is clearlywidespread in justice systems, with seriousimplications for the poorest people who areleast able to pay bribes or engage effectivelawyers.

Cleaning up the justice section is thus anurgent priority. Unless countries are deter-mined to ensure that their systems of justiceare clean and fair, they are unlikely to be ableto uproot corruption from other sectors –since there will be much less prospect ofsuccessfully prosecuting offenders.

Much of this will require intensive insti-tutional reform – to ensure that police forcesand the judiciary operate efficiently, withadequate salaries, and systems of checks andbalances, both official and unofficial, toensure that justice is delivered in an openand transparent fashion. This is likely torequire significant investment. Justice doesnot come cheap. But on the other hand itshould not be for sale.

In India the intro-duction in 1998 of

ICT in courtmanagement has

reduced the hugebacklog in theSupreme Court

But if you do not have the Tao yourself,what business have you spending your timein vain efforts to bring corrupt politiciansonto the right path?CONFUCIUS

CHAPTER 3: KEEPING PUBLIC SERVICES HONEST KEEPING PUBLIC SERVICES HONEST KEEPING PUBLIC SERVICES HONEST KEEPING PUBLIC SERVICES HONEST KEEPING PUBLIC SERVICES HONEST 5757575757


Keeping Public Services HonestKeeping Public Services HonestKeeping Public Services HonestKeeping Public Services HonestKeeping Public Services Honest 33333

TABLE 3.1CORRUPTION IN THE HEALTH SECTOR

Patient–Doctor Payer–Hospital Hospital–Supplier Withinhospital/Ministry

Bribes for Fraudulent billing Kickbacks for Sale of jobs andtreatment for fictional treat- purchase orders promotions and

ment for drugs, equip- transfersment, supplies,meals and clean-ing services

Induced demand Patients with Bribes for appro- Theft of fundsfor unnecessary coverage get pro- val of drugsprocedures (e.g. cedure and pres-caesarean criptiondeliveries)

Diluted vaccines Doctors bribed by Theft ofdrug companies suppliesfor prescribingtheir drugs

Source: Azfar and Azfar 2007.

Developingcountries in the

Asia-Pacific regionhave been

expanding healthservices, though the

region as a wholestill spends less as

a percentage ofGDP than other

parts of the world

In rich and poor countries alike, governmentsassume the major responsibility for ensuringthe availability of key services. In some cases,they will do so by regulating provision by theprivate sector, but in many developing coun-tries governments take responsibility fordelivering the services themselves throughgovernment departments or public corpora-tions. As a result they employ large numbersof people as teachers or doctors or nurses, forexample, directly as civil servants or indi-rectly as workers in public corporations thatsupply electricity, water or sanitation ser-vices. Most of these employees do their jobsconscientiously, often in very difficult circum-stances, but others exploit their position totheir own advantage – to extract ‘rent’ fromtheir privileged positions.

Health ServicesHealth ServicesHealth ServicesHealth ServicesHealth Services

Developing countries in the Asia-Pacific re-gion have been expanding health services,though the region as a whole still spends lessas a percentage of GDP than other parts ofthe world. Worse still, much of this expendi-ture is being dissipated by corruption. As aresult even basic preventive measures such asvaccination programmes can be undermined,while families already in distress as a resultof illness face the added anxiety of unpredict-

Corruption is widespread in social services such as health and education, as well as in publicutilities that provide electricity and water. As a result poor people find themselves excluded fromschools or hospitals that they cannot afford, or asked to pay extra simply to gain access toservices to which they already have a right. Communities are however now keeping a closercheck on services and finding ways to monitor and control them.

able extra costs or are driven towards theprivate sector.

Corruption can occur within health ser-vices at all levels, from grand corruption asfunds are siphoned off during the construc-tion of new hospitals or health centres, topetty corruption as health workers or admin-istrators demand bribes just to perform theirroutine duties. Some of the most commonforms of corruption within health services aresummarized in Table 3.1.


that counterfeit drugs have grown from 10 per cent to 20 percent of the total market. In the Philippines, 30 per cent ofdrug outlets carry fake drugs. A 2004 survey in SoutheastAsia showed that among 188 tablets presented as the anti-malarial drug artesunate, more than 50 per cent were foundto be counterfeit. International health officials are alsoconcerned that fake antibiotics and anti-retrovirals will soonbe leaking into the market.

In the case of anti-malarials insufficient quantities ofactive ingredients, besides failing to heal unsuspecting pa-tients, can also lead to drug resistance. Concern about therising counterfeit drug trade is such that the World HealthOrganization last year established the International MedicalProducts Anti-counterfeiting Taskforce. One of its key objec-tives is to encourage countries to recognize counterfeitingdrugs as a crime against human security and to introducelegislation that deals specifically with the issue. The Agencyhas also set up the ‘Rapid Alert System’ (RAS) – the world’sfirst web-based system for tracking the activities of drugcheats, which transmits reports on the distribution of coun-terfeit medicine to National Health Authorities in the region.

Sources: WHO. n.d. (a).; Centres for Disease Control and Pre-vention. n.d. WHO. n.d. (b).

Another outcome ofcorruption in drugssupply is theprovision of low-quality drugs

Grand Corruption and ProcurementGrand Corruption and ProcurementGrand Corruption and ProcurementGrand Corruption and ProcurementGrand Corruption and Procurement

Health funds can disappear at the highestlevel of government. In some countries 10 percent of the health budget can disappear enroute from the Ministry of Finance to theMinistry of Health, and more subsequentlyleaks out through various side channels, asthe funds flow from national governments toprovinces and to local hospitals and clinics.1

Much of this corruption is linked withprocurement as companies pay bribes forpublic contracts for major constructionprojects. There can also be kickbacks fromsuppliers of equipment or of ongoing services,such as meals or cleaning. Health ministryofficials and hospital administrators caninflate the cost many times, colluding withprivate suppliers to share the difference.

In any health service the largest expendi-ture after personnel costs is for drugs. Asia isone of the world’s fastest-growing markets

for pharmaceutical products and many mul-tinational drug companies are planning toexpand their investments and operations inthe region. Corruption can occur at all stagesof drug development and supply fromapproval and registration, to selection anddistribution. For the drug companies one ofthe main priorities is to ensure that theirproducts are prescribed, so they are profli-gate with their ‘perks’ for doctors that couldbe seen as forms of corruption. They might,for example, sponsor doctors at conferences,underwrite symposia, or pay expenses fordoctors and their spouses to attend druglaunches abroad. They may also give free drugsamples and offer expensive gifts such aswatches, air-conditioners, laptops or evendown-payments for new cars.

Another outcome of corruption in drugssupply is the provision of low-quality drugs.In some countries around one-third of drugsare expired or counterfeit (Box 3.1). These

BOX 3.1COUNTERFEIT DRUGS IN ASIA

According to the World Health Organization, a counterfeitdrug is ‘a medicine, which has been deliberately and fraudu-lently mislabelled with respect to identity and/or source. Coun-terfeiting can apply to both branded and generic products andcounterfeit products may include products with the correctingredients or with the wrong ingredients, without activeingredients, with insufficient active ingredients or with fakepackaging.’

The counterfeit drug trade is of particular concern in Asiaand the Pacific because of the volume of drugs produced inthe region and high levels of corruption at many stages alongthe pharmaceuticals supply chain. Corruption can occur, forexample, when regulatory bodies are bribed to approve newdrugs without meeting standards. It can also happen at thepoint of manufacture, when corrupt employees siphon offactive pharmaceutical ingredients and substitute substancesthat may have insufficient amounts of active ingredients oractually be toxic. It can also happen at the point of sale, wheredrugs can be repackaged or adulterated.

The extent of the problem in Asia is troubling. In Indone-sia, the International Pharmaceutical Manufacturers Groupestimates that counterfeit drugs make up 25 per cent of the$25-billion pharmaceutical market. In India, estimates showthat about one in five strips of medicine sold are fake and


they might welcome the opportunity to influ-ence the outcome.

Staffing and AbsenteeismStaffing and AbsenteeismStaffing and AbsenteeismStaffing and AbsenteeismStaffing and Absenteeism

Corruption can also take various formswithin health service staffing. This mayinvolve, for example, buying positions at thetime of hiring, along with nepotism or politi-cal or military influence for postings. In oneSouth-East Asian country it has beenreported that a post of director at the provin-cial or national offices of the health ministrycan be obtained at a going rate of up to$100,000, while a job as a low-level public

Figure 3.1: Proportion of Users of Health Services Who MakeFigure 3.1: Proportion of Users of Health Services Who MakeFigure 3.1: Proportion of Users of Health Services Who MakeFigure 3.1: Proportion of Users of Health Services Who MakeFigure 3.1: Proportion of Users of Health Services Who MakeInformal Payments, Selected CountriesInformal Payments, Selected CountriesInformal Payments, Selected CountriesInformal Payments, Selected CountriesInformal Payments, Selected Countries

Source: Lewis 2006.

Health workersfrequently ask for

‘extra payments’ tospeed up admission

to hospital or toprovide a particular

drug or treatment

may be sold fraudulently through the privatesector, or through public health services as aresult of corruption on the part of those pro-curing drugs.

BriberyBriberyBriberyBriberyBribery

Users of health services are more likely toencounter corruption as a demand for a bribe.Health workers frequently ask for ‘extra pay-ments’ to speed up admission to hospital orto provide a particular drug or treatment.Bribery is common throughout the region, butparticularly high in South Asia, as is evidentfrom Figure 3.1.

One survey of Bangladesh, India, Nepal,Pakistan and Sri Lanka found that healthworkers often demanded bribes for admissionto hospital, to provide a bed, or to give subsi-dized medications.2 In one Indian city, asocial audit in the form of citizen report cardsrevealed that more than half of the respon-dents had paid bribes in government hospi-tals. Among people using hospitals in smallcities the proportion paying bribes rose toalmost 90 per cent. In maternity hospitalsmothers even had to bribe the nurses in orderto see their babies.3 Within some countries inSouth-East Asia, the proportion of peoplepaying bribes tends to be lower perhapsbecause more people get their treatment in theprivate sector.4

These extra payments have now becomeso institutionalized that many people havecome to accept them and even regard them asuseful. In countries where the quality of pub-lic sector care is weak, they can see theseinformal fees as a form, albeit unreliable, ofquality assurance. They regard health as soimportant that it is worth almost any price toget the best outcome. This is particularly thecase for in-patient treatment, for which theyhave fewer choices: concerned about greaterrisk from invasive or intensive procedures


What can be done to curb this activity? First, steps willhave to be taken to reduce the vulnerability of the drug-con-trolling agencies. Checks and balances should be enforced toensure their integrity and neutrality, as well as making surethat these offices are adequately staffed. Additionally, ethicalcommittees in hospitals should be streamlined and mecha-nisms should be in place to ensure that they implement therules on conflict of interest.

Secondly, the only training many doctors have on conduct-ing trials comes from the company in question or a contractedresearch organization, which may include trips abroad andother benefits. Some misconduct could be reduced by neutraltraining, including lessons on how to identify and act onethical issues. Overall there needs to be more thorough moni-toring of the entire process of drug testing, right fromapproval by the national drugs controller to the actual tests onpatients.

Sources: BBC News 2006; CancerPage.com 2001; De Ron 2006;Radakrishnan n.d.

The most extremeabsenteeism takesthe form of ‘ghostworkers’

servant in the health sector will cost $3,000.In countries where government salaries aregenerally only around $40 per month theseare huge sums which are paid on the assump-tion that they can be more than recoupedthrough corruption.5

Corruption in staffing can also take theform of absenteeism. At a low level this iscommon in most working environments andis usually more an issue of managementfailure. But at higher levels, and in more sys-tematic forms, this can be considered corrup-tion, since health workers are abusing theirposition by taking salaries while not showingup for work. Across the region reportedabsenteeism rates cluster around 35 per centto 40 per cent and tend to be higher fordoctors and nurses than for other healthworkers. In one survey from Rajasthan inIndia nurses were to be found in their postsin villages only 12 per cent of the time.6 Ratesof absenteeism are also typically higher inrural areas, not only because of the lack of

supervision but also because staff find it moredifficult to get to work or are discouraged bythe prospect of using clinics that lack equip-ment or drugs or are in a poor state of repair.

The most extreme absenteeism takes theform of ‘ghost workers’. These are fictitiousstaff whose salaries are paid into the accountsof public officials.

Grand corruption and many forms ofpetty corruption, as in other parts of publicservice, are often a reflection less of need thanof greed. But there are other contributingfactors. One is that health services aregenerally underfunded, so hospitals andhealth centres may feel the need to makecharges just to cover the costs that are notbeing met by central government (Box 3.2).Since these payments are unofficial, however,they are unlikely to be accounted for fully andin institutions where management isweak will sustain an atmosphere whereunofficial payments and corruption seemnormal.

BOX 3.2DRUG EXPERIMENTATION

Transnational pharmaceutical companies are providing muchwanted capital investments but also challenging the region toimprove its systems of regulation. In most countries thepharmaceutical regulatory bodies are understaffed and unableto cope with the new industry of drug testing. This hascreated much room for corruption. In India, for example,clinical tests have to be authorized by the ethical committeeof the hospital that will carry out the trial and by the DrugsController General, which is a part of the Indian healthministry. This is, however, mainly a paperwork check.Random inquiries have found that some patients are not evenaware that they are being experimented on.

Hospitals are often in dire need of funds and for the sumsoffered by the pharmaceutical companies are willing to cutcorners. In most cases the companies refer to written consentfrom patients or relatives, however interviews have shownthat many people just accept what the doctor recommends,without understanding the implications. Additionally, evenwhen these test drugs prove to be efficient most of thepatients they are being tested on have to revert to their olddrugs after the test period is over, because they cannot affordthe new ones.



One might expect corruption to result inpoorer standards of health. Some cross-national studies have indeed suggested thatin countries where levels of corruption arehigher some health inputs such as immuniza-tion are lower. This could be because vaccinesor other supplies are being stolen or becausethe health workers are absent from theirposts. Immunization rates may also be lowerbecause corrupt officials have an interest indirecting investment towards expensivecurative care which offers greater opportuni-ties for rent-seeking – diverting funds fromimmunization programmes or other forms ofprimary health care.

These cross-national comparisons havebeen supported by national studies.7 Onestudy from a country in South-East Asiaestimated that a 10 per cent increase incorruption, as measured by the perceptionsof public officials as well as of service users,reduced the immunization rate by 10 per centto 20 per cent and also the odds of complet-ing vaccination by four times. The sameincrease in corruption increased the waitingtime in public health clinics by as much as 30per cent and decreased user satisfaction by30 per cent. This study also highlighted aninteresting difference between urban andrural areas. In the urban areas, as corruptionincreased, households were more likely to bedeflected to private providers. But in therural areas where they had fewer alternativesto public health clinics, they simply had towait longer.8

Some studies have also looked at therelationship between corruption and healthoutcomes. A global study of 89 countriesfound that a two-point change in the corrup-tion rating, as measured by the World Bankcontrol of corruption index, was associatedwith a halving of child mortality.9 Indeed even

controlling for many other factors that wouldalso reduce the death rate, such as per capitaincome, the level of female education, publichealth spending, the dependency ratio andthe extent of urbanization, corruption stillhad a significant impact on child mortality.Of course not all of this corruption will be inhealth services. Child mortality, for example,will be affected by the availability of cleanwater and good sanitation, so corruption inthese services too is likely to damagechildren’s health.

Hospitals often run short of supplies as aresult of mismanagement, lack of funds andnegligence, but this is exacerbated by corrup-tion. Some users may provide their own linenor food as a cultural preference, but they canalso find themselves buying bandages,syringes and medicines – a significant burdenfor the poor.

Bribery and the need to make up for miss-ing supplies inevitably discriminate againstthe poor. This is not because they have to paymore. Indeed in absolute terms it seems thatcompared with ‘richer customers’ they payaround 40 per cent less.10 However, theselower payments still represent a far highershare of household income, and if the poorpay less they may also get a lower qualityservice; those who can pay more will be ableto jump queues and get preferential treatmentin public hospitals. And when public healthservices are undermined by corruption thericher households have the option of payingfor private care.

Uprooting Corruption in Health ServicesUprooting Corruption in Health ServicesUprooting Corruption in Health ServicesUprooting Corruption in Health ServicesUprooting Corruption in Health Services

Reducing corruption in health and othergovernment services will require action fromabove and below. From above, governmentswill need to ensure more transparent andbetter managed services; from below, userscan work together to resist demands for

Bribery and theneed to make up

for missingsupplies inevitably

discriminate againstthe poor


bribes. Examples from action around theregion include:

Reducing Informal Payments in Cambodia. InTakeo Provincial Hospital in Cambodia in1996, the monthly revenue from informalpayments was estimated at $13,750 – aboutfive times the monthly hospital payroll andabout 45 per cent of the total budget. Sincethen the hospital has reformed the way itworks. It has, for example, replaced informalpayments with formal user fees and directsthe revenue from these to pay bonuses forstaff. Even so, patients are now paying less inofficial fees than they did in informal charges,and know too that the fees will be consistentand predictable. This has transformed theoperation of the hospital, which treats manymore people at a lower cost.11

Radio power in India. The radio programme‘To be Alive’ is broadcast on state radio in thepoor rural region of Kutch in Gujaratprovince. This is made by semi-literate ruralpeople trained by a human rights organiza-tion to be amateur radio reporters. Often awhole team of reporters will carry out ‘radioraids’. They directed one, for example, at adoctor who was charging women for deliver-ing babies at a community health centre – aservice which was supposed to be free for thepoor. This sparked a government inquiry intoillegal charging at primary health centresacross the country.12

Removing fake drugs in Mekong countries. In2003 in the Mekong subregion – Cambodia,Lao PDR, Thailand, Viet Nam, and YunanProvince of China – it was found that all coun-tries were using substandard or fakeantimalarials. With the combined support ofthe US Pharmacopeia Drug Quality andInformation Programme, USAID, WHO, andnational and local governments, the regula-

tory authorities in all these countries havebeen improving communications and coopera-tion across borders, so they have been able tonotify each other of the circulation of fakedrugs and remove them more quickly fromall outlets.13

New prescriptions in China. In June 2006,China’s legislature adopted the sixth Amend-ment to the Criminal Law, stipulating thatstaff members of schools and hospitals willface criminal penalties if they seek bribes orreceive kickbacks or commissions. The formerCommissioner of China’s State Food andDrug Administration (SFDA) was subse-quently convicted for accepting more than$850,000 in bribes. The government haslaunched a large-scale investigation among theSFDA staff who are possibly involved in thiscase. All drug licences will be re-issued. TheMinistry of Public Health now requireshospitals to separate the procurement ofdrugs from the writing of prescriptions sothat neither hospitals nor doctors benefitfrom prescribing particular drugs.14

Education ServicesEducation ServicesEducation ServicesEducation ServicesEducation Services

Throughout the Asia-Pacific region, educationtypically forms a large part of the publicsector, consuming about 20–30 per cent of thenational budget and employing a substantialproportion of each country’s civil servants.15

Since most of these have direct contact withthe general public, it is not surprising thateducation services are vulnerable to corrup-tion. Moreover, with so many people involvedthere are often strong vested interests thatwill resist attempts at reform.

Unlike other social services, corruption ineducation can also affect behaviour and per-ceptions of future generations. Children whosee their parents pay bribes for school admis-sions and to get books and better grades, learn

Unlike other socialservices, corruptionin education canalso affectbehaviour andperceptions offuture generations


In many countriescorruption resultsin the recruitmentof ‘ghost teachers’

or even in creationof entire ‘ghost

institutions’

from a young age that things can be achievedby violating rules. Some of the types ofcorruption prevalent in education systemsin Asia and the Pacific are summarized inTable 3.2.

ProcurementProcurementProcurementProcurementProcurement

Corruption in the procurement of materialand labour for school construction can in-crease costs between two and eight times, asfunds for school buildings are siphoned off bycorrupt officials.16 It also reduces the qualityof construction since contractors who paybribes to get contracts try to offset some ofthe costs by using sub-standard materials.This can have tragic outcomes. Many coun-tries in the region are vulnerable to earth-quakes which have often laid waste tohundreds of schools, burying children withinthem. Although schools are not usuallydesigned to be earthquake-proof they shouldprovide at least some level of security, ratherthan instantly crumbling at the onset of anearthquake.

Corruption can exist in the purchase oftextbooks, desks, blackboards, and othersupplies, as well as in contracts for cleaningservices and meals. Supplies and funds arefrequently misappropriated. In one provincein Pakistan a social audit estimated that only16 per cent of textbooks procured by thegovernment reached the intended children.17

In Bangladesh in 2001, 25 million secondarylevel children started the school year withouttextbooks and when the books were finallydelivered they were found to be full oferrors.18

Ghosts and AbsenteesGhosts and AbsenteesGhosts and AbsenteesGhosts and AbsenteesGhosts and Absentees

In many countries corruption is widespreadin the hiring of teachers, which in the mostextreme form, results in the recruitment of

‘ghost teachers’ or even in creation of entire‘ghost institutions’ – with the allocatedsalaries and other expenses going into thepockets of corrupt officials.

A related problem is teacher absenteeism.Surveys across the region show this to rangefrom 16 per cent to 25 per cent in primaryschools.19 Even so, teachers are almost neverfired. Indeed since they are rarely disciplinedeven for repeated absence, it is impressive thatthere are so many dedicated teachers whowork conscientiously.

Bribes and Unauthorized FeesBribes and Unauthorized FeesBribes and Unauthorized FeesBribes and Unauthorized FeesBribes and Unauthorized Fees

Just as families may need to pay bribes to getinto hospitals, they may also have to paybribes to get their children admitted toschools. In China, in 2003 audits of nearly3,000 primary and 1,500 secondary schoolsin Jiangxi found 125 cases of illegally collectedfees worth $2 million. Nationwide thegovernment uncovered over $20 million inillegally collected school fees. In 2004 theauthorities disciplined 2,488 people in theeducation service and dismissed 359 school

TABLE 3.2CORRUPTION IN THE EDUCATION SECTOR

Student–Teacher Payer–School School–Supplier Within schoolor Ministry

Bribes for admis- Ghost schools and Kickbacks for Sale of jobssion and grades ghost teachers construction and promotions

and transfers

Sale of exam Inflating number Kickbacks for Fraudulentpapers of students to get construction or billing for

reimbursements for purchase expensesorders for equip-ment, meals andcleaning services

Absenteeism Loan officers Bribes for appro- Prioritisingand induced bribed to give val of textbooks expendituresdemand for loans to rich where the rentprivate tuition students or non- seeking poten-

students tial is high.

Source: Azfar and Azfar 2007.


Many see educationas one of the fewpossible ways outof poverty and goout of their way tosecure thenecessary funds toput their childrenthrough school

principals. At the higher education level thenational government audited 18 institutionsin 2003 and found that 15 per cent of allcharges were illegal.20 While similar examplescan be provided from other countries, itseemed that the main causes of corruptionwere the lack of accountability, low salariesand the monopoly of power, compounded bythe shortage of specific guidelines or auditingsystems.

This problem is also common in SouthAsia where students are often required tomake unofficial payments for admission toschools, for books, sporting or religiousevents, examinations, or promotion to higherclasses.

Bribes for tuition or a better grade mayalso be extorted in the form of sexual exploi-tation. Educators abusing their positions inthis way betray the trust of the community,exposing children to illegal and unethicalpractices. This can affect boys, particularlyat an early age, but girls may be more vulner-able since they are less able to challenge suchabuse.


Corruption reduces the funds available foreducation and lowers the quality.21 Siphon-ing off funds robs schools and pupils of equip-ment and facilities. The quality of teachingalso suffers if there is corruption in recruit-ment or promotion or if teachers are fre-quently absent or make less effort in schoolsbecause they want to work as private tutorsteaching some of the same pupils (Box 3.3).Studies have shown that higher levels ofcorruption are correlated with lower schoolenrolment and higher rates of repetition anddropout and illiteracy.22

Poor families also suffer if they have topay bribes. Many see education as one of thefew possible ways out of poverty and go outof their way to secure the necessary funds toput their children through school, oftenworking at several jobs. If they cannot raisethe funds their children are less likely toenrol or may subsequently drop-out.

There are also long-term social costs. Ifricher people can buy admission to highereducation, better exam results, or degrees,this blocks key routes of social mobility. Atthe same time, entire generations of youth arebeing mis-educated – to believe that personalsuccess comes not through merit and hardwork, but through favouritism, bribery andfraud.

Uprooting Corruption inUprooting Corruption inUprooting Corruption inUprooting Corruption inUprooting Corruption inEducation ServicesEducation ServicesEducation ServicesEducation ServicesEducation Services

Governments urgently need to address cor-ruption in education. Otherwise schools willcontinue to transmit a culture of corruptionto succeeding generations, undermining allother anti-corruption initiatives. Thus far,however, few countries in the region have beenable to approach the issue in a comprehensiveand effective manner. A number of initiatives

BOX 3.3CORRUPTION IN PRIVATE SCHOOLS IN BANGLADESH

Bangladesh has a large number of private schools which receive Govern-ment support. Their interactions with the Government have providednumerous opportunities for corruption. First, in order to receive finan-cial assistance to pay the salary of school teachers, a private school has torenew its registration each year which means bribing the concernedofficials. They might pay for this by requesting a contribution from teach-ers or by paying them less or by registering a non-existent teacher andpassing the corresponding sum back to the official. A school that fails tomake the payment is likely to find that their application will be lostor misplaced. Throughout the school year, the schools are also madeto pay bribes to inspection officers and to get students registeredfor exams.

The teachers themselves will also have to pay to get a job in a privateschool. First they need to ‘manage’ the school’s managing committee andmake a contribution to the district education officer. They will also needto pay to get enrolled in the monthly pay roll or if they want apromotion. The students are also drawn into the corruption cycle. Sinceteachers have to cover the costs of these payments they will often enroltheir pupils for compulsory extra coaching.

Sources: Ahmad et al. n.d., Ahmed 2006.


Practice shows thatgovernments can

tackle corruption ineducation through

much closer super-vision and by

allowing communi-ties more control

over schools

have been implemented, some of them moresuccessful than others. Practice shows thatgovernments can tackle corruption in educa-tion through much closer supervision and byallowing communities more control overschools, through parent–teacher associationsand other local organizations (Box 3.4). Somesuccessful initiatives include:

Counting books in the Philippines. Textbookprocurement and delivery in the Philippineshas long been plagued by theft, patronage andfavouritism. To tackle this, one of thecountry’s best-known anti-corruption advo-cacy groups, Transparent AccountableGovernance (TAG), in 2004 organized BookCount 2, bringing together a range of civilsociety groups, from NGOs to churches toGirl and Boy Scout groups, to monitor thedelivery of books all over the Philippines.TAG is a joint project of the Makati BusinessClub, the Philippines Center for InvestigativeJournalism, the Philippines Center for PolicyStudies, and Social Weather Stations, withfunding provided by USAID, through a part-nership with the Asia Foundation.23

Digital attendance in India. Most ruralschools in Rajasthan have only one teacher, sowhen the teacher is absent, children miss anentire day of school. Because the villages areoften remote it is difficult to monitor atten-dance and the absentee rate has been over 40per cent. The NGO Seva Mandir came upwith a novel solution – requiring teachers totake a photo of themselves with the studentsat the beginning and end of each school dayusing cameras with tamper-proof date andtime functions. They randomly selected 60 toserve as treatment schools and another 60 asa control group. Teachers received a salary ofabout $22 if they were present for at least 21days in a month and a bonus of $1 for eachadditional day but were penalized $1 for each

day they were absent. In the control schools,teachers simply received a monthly salary of$22 but were reminded that they could befired for poor attendance and warned thateach month there would be unannouncedschool visits. The results were striking.The schools with cameras made dramaticimprovements and increased the number ofchild-days taught per month by one-third.The experiment was also cost-effective:average salaries in both groups were similarthough this did not include the costs ofcameras and programme administration –annually around $6 per child.24

Community management in Indonesia. In someschools in Indonesia corruption in the man-agement of funds has been minimized by theinvolvement of parent’s associations whichdecide on the use of these funds and monitorthem to ensure that they reach their intendeddestination. At the beginning of the schoolyear, school officials meet with representa-tives of the parent’s association to agree onan annual plan, then during the yearsprovide them with a detailed accounting of

BOX 3.4EDUCATION AS A SOLUTION

Education is frequently a site of corruption but can also offer solutions.A number of countries in the region, from Mongolia to Papua NewGuinea, have introduced some form of anti-corruption education provid-ing children with the information and knowledge to take a stand oncorruption for the future; this also partly contains the seeds of howcorruption can be countered.

Public education is an important part of Hong Kong’s IndependentCommission Against Corruption (ICAC). The Community RelationsDepartment aims to change public attitudes towards corruption. The maintargets, however, are young people who are reached through schools.From an early age children are being exposed to anti-corruption andmorality lessons. ICAC also organizes a number of social events such asconcerts and sports targeting youth. Effective moral education pro-grammes can help young people internalize the conviction thatcorruption is wrong and unacceptable. Ultimately fighting corruptionshould rely less on external controls and deterrents and more on self-motivation and self-discipline.

Source: http://www.icac.org.hk/eng/main/index.html


expenditures. The system works because theuse of these funds is highly structured,expenditures are transparent and the commu-nity attaches considerable importance to thesystem and takes pride in its success.25

Mobilizing support in Pakistan. Following thedevastating earthquake in 2005, most pri-mary schools in the Manshera district ofPakistan were totally destroyed. Some of theteachers were displaced, but others also usedthe earthquake as an excuse for absenteeism.A local NGO managed, however, to get a num-ber of schools functioning again by mobilizinglocal opinion. The NGO contacted leaderssuch as imams and elected representativesand encouraged them to put pressure onteachers. The NGO also organized workshopswith teachers, local counsellors and clericswhere they emphasized social and religiousresponsibilities for education and children’srights. Almost all the teachers participated inthe workshops, and within two months ofthe earthquake most primary schools in thedistrict were functioning again.26

Such examples should however only beconsidered as an indication of what ispossible. What works in one context may notwork in another. Some countries have, forexample, had good experiences with decen-tralization but in others this has merelyshifted corruption from one level of adminis-tration to another. No single intervention willbe sufficient in itself, rather the more success-ful approaches have combined a comprehen-sive understanding of the problem withincentives, supervision, sanctions and partici-pation.27

Public UtilitiesPublic UtilitiesPublic UtilitiesPublic UtilitiesPublic Utilities

Many countries in the Asia-Pacific region havemade progress in delivering essential services,particularly water; around 80 per cent of the

population now have access to improvedwater supplies. Progress in sanitation hasbeen slower: indeed South Asia’s sanitationcoverage, at only 37 per cent, is among thelowest in the world. As this implies, even forwater many millions of people are still un-served. In 2004, more than 650 millionpeople lacked access to safe water supplies,and almost two billion to safe sanitation.28

The situation is worse in the rural areas, andfor the poorest families. Electricity suppliestoo can be erratic: many parts of the regionsuffer from low voltage operations or fre-quent power outages.

Even these data overestimate access toservices since the quality is often low. Watersupplies, for example, can be intermittent andpolluted by faeces from leaking septic tanks.This has serious implications. Each yearmillions of children die as a result of diar-rhoea and other diseases caused by uncleanwater and poor sanitation, compounded byerratic power supplies to health facilities. Forbusinesses and households that rely on publicgrids, inadequate power supplies severelylimit the technology they can use and theirrange and duration of economic activities.

Grand Corruption in InfrastructureGrand Corruption in InfrastructureGrand Corruption in InfrastructureGrand Corruption in InfrastructureGrand Corruption in Infrastructure

One of the main causes of low coverage andpoor quality services is underinvestment.Extending water, sanitation and electricitycoverage is expensive, requiring large-scaleupfront investment for basic infrastructure.Much of this is being dissipated throughcorruption.29 Across the region the standardkickback for infrastructure projects is oftenquoted as 10 per cent of the value of the con-tract though in some countries it is thought tobe 20 per cent to 40 per cent. Corruption canemerge through the whole cycle fromproject selection to subsequent repairs(Box 3.5).

Each year millionsof children die as aresult of diarrhoeaand other diseasescaused by uncleanwater and poorsanitation, com-pounded by erraticpower supplies tohealth facilities


BOX 3.5OPPORTUNITIES FOR CORRUPTION THROUGHOUT THE PROJECT CYCLE

quality (typical examples include less cement or steel rein-forcements)

Corrupt contract amendments to a contract’s scope of workand costs

Outright theft of materials, equipment or services withcollusion

Corrupt diversion of allocated project funding

Duplication of payments, alteration of invoices, lack ofsupporting records, ineligible payments, over billing, mis-use of funds, unauthorised payments, etc.

Concealing substandard work

Bribing the relevant official to certify that the work wasdone according to specification

Service delivery

Superiors in the public service charge ‘rents’ from theirsubordinates

Siphoning off supplies to market

Ghost/absent workers – accepting a salary and not being atthe job

Use of contacts or money to get better or faster service orto prevent delays

Maintenance and management stages

Corruption in procurement of equipment and spare parts

Withholding needed approval or signatures for gifts/favours

Bribes to win O&M contracts or personnel appointments

Lower standard of construction to create the need forexpensive repair and maintenance

Subscription process

Extra-legal payments for new connections

Consumers paying money in order to speed up the process

Officials being paid to turn a blind eye to unauthorizedconnections

Billing system

Opaque system of billing

Irregularities in the ledger of paid bills

Disconnection

Disconnecting customers in good standing

Extorting money to reconnect customers

Extorting money to prevent disconnection

Fault redress

Extorting money for repairs that are meant to be free

Gift giving in return for favours in fault redress

Source: Sohail and Cavill 2007.

Project selection

Corruption can negatively affect the selection of projects.For example, corruption can divert resources away fromsocial sectors toward defence and major infrastructureprojects

Corruption may also encourage the selection of uneconomi-cal projects because of opportunities for financial kickbacksand political patronage

Planning stages

Projects can be used as vote winners or opportunities forpersonal gain rather than on the basis of priority or avail-ability of financial resources

Planning in favour of high value infrastructure (whiteelephant projects) and against the interest of the poor

Project requirements may be overstated or tailored to fitone specific bidder

When firms bidding for contracts offer ‘training’ or ‘enter-tainment’ to officials

Inspection stages

Weak oversight and supervision mechanisms that preventthe detection of fraud and corruption

Kickbacks can be given to persuade inspectors to turn ablind eye to slow implementation of projects, unfulfilledcontract requirements, and other instances of malpractice

Mutually corrupt relations among construction companies,inspection teams and government authorities continued,with inspectors overlooking the improper construction

Design

Project design or timing of the project might be manipu-lated to benefit particular suppliers, consultants, contrac-tors and other private parties

Bribes for favourable environmental impact assessment/planning proposal/approval

Over designed and overpriced projects can increase poten-tial corrupt earnings during implementation

Kickbacks to government officials for rapid privatizationsof utilities

Bid and contract signing stage

Political parties levy large rents on international businessesin return for government contracts

Kickbacks for construction and supply contracts

Officials receive excessive ‘hospitality’ from contractorsand benefits in kind

Inadequate advertising of tender

Excessively short bidding time

Construction

Provision of equipment or goods of lower than specified


One contractor in South Asia describedthe process. Contractors, he said, have to payat every stage. This starts with basic informa-tion. Public authorities have been known topublish advertisements for new tenders inobscure newspapers, particularly duringfestival times, so that potential bidders areunlikely to see them. Instead officials expectcontractors to pay to be informed. Having dis-covered the project and made a bid, the con-tractor will then have to bribe the executiveengineer to ensure that the bid is successful.When work has been completed the contrac-tor will need to pay the inspecting engineerfor a good report. After completing the worksome companies put khushi kora money intothe budget as incidental costs (bribes areknown as khushi kora or ‘making happy’. Theterm comes from the promise ‘do the workwe will make you happy later’). The need topay bribes to the authorities and mastansmeans that the contractors are obliged toengage in dui numbari kaj (illegal activities).30

Nevertheless, much of the blame lies withconstruction companies themselves whichparticipate actively in all these activities,indeed frequently taking the initiative. Theyare well versed in the ways of colluding withother bidders or with officials in executingagencies, governments and financing agencies.Even before there is a proposal a contractorwith insider connections can influence acontract’s identification and creation as wellas its specification, tender conditions, prepa-ration and design.

Contractors also collude in tendering andbidding. A group of contractors will often putin coordinated bids in such a manner thattheir preferred candidate will win – on theunderstanding that the others will be desig-nated as sub-contractors or as winners forfuture projects. In many cases, officials areaware of the bid rigging. When this happens,the project costs include the ‘grease money’ to

be paid by the pre-agreed winner, and acertain percentage goes to the agency’spersonnel. Not all the payments need be incash. Private companies can also offer lavishhospitality inviting municipal staff to visittheir headquarters with tickets and allexpenses paid in the expectation of beingawarded the contract.

Once the project is underway there aremany other opportunities for fraud in billing,for example, in the acquisition of rights ofway, and in degrading construction quality.Companies can make ‘ghost’ or substandarddeliveries, or submit supplemental billings forcost over-runs, or they can pad deliveryreceipts or payrolls – all with the knowledgeof project engineers, auditors, examiners, andsupervisors. Then when all this corruptionresults in substandard work, new opportuni-ties arise to prepare inflated bills for repairsand maintenance.

Grand Corruption in Public NetworksGrand Corruption in Public NetworksGrand Corruption in Public NetworksGrand Corruption in Public NetworksGrand Corruption in Public Networks

Once the systems are in place corruption con-tinues in day-to-day operations. The ensuinglosses can be huge. It has been estimated thatif the water sector operated in a transparentfashion, and corruption were eliminated, 20per cent to 70 per cent of resources could besaved. The World Bank suggests that 20 percent to 40 per cent of water sector financesare lost to dishonest and corrupt practices.31

For example, research in India into a Waterand Sewerage Board found corruption in thefollowing aspects of service delivery:

Bulk water supply. The quantity of water to besupplied to residential, commercial or indus-trial units is under the control of a ‘key-man’or ‘line-man’ who regulates the valves. For asuitable payment he can open these for longerthan scheduled or favour some areas overothers. A handsome bribe can ensure an

Once the systemsare in placecorruption continuesin day-to-dayoperations


Whether provisionis public or private,

utilities tend to belocal monopolies

additional connection to a particular housing,industrial or commercial unit. Local officialscan also collude with owners of water lorriesto supply water through lorries rather thanthrough municipal pipes, enriching both ve-hicle owners and themselves in the process.Another technique is to bribe the water andsewerage board to tap directly into the mainline and then supply water by donkey cart tovillages and settlements.

Accounts and recoveries. Officials may inten-tionally issue incorrect high bills to consum-ers in order to receive a bribe to correct thebill – blatant blackmail that can only bebypassed by influential people. Officials mayalso do the reverse – under-bill in return for abribe or favour.

Purchases. Staff commonly accept commissionpayments or kickbacks for purchases ofeverything – from heavy machinery to minorfixtures. Officials can, for example, raise afake request for a purchase, then forge anentry in the stock register to say that thecomponents have been supplied by colludingwith a contractor who then issues a corre-sponding invoice, the proceeds of which heshares with the officials. This activity is alsocommon in the maintenance of municipalvehicles, with officials paying fake bills formaintenance and fuel.

New connections. Getting a connection is oftendesigned intentionally as a very complicatedprocess, so consumers may find it quicker toapply through a middle man, who may be anapproved contractor or someone from the de-partment. As well as taking his own commis-sion, this person knows who to pay and howmuch, they may also provide a higher-volumeconnection at the price of a lower-volume one.

One of the most high-profile cases ofdubious provision of power supplies occurred

in 1990 in the state of Maharashtra in India.A TNC attempted to supply power to thestate through a subsidiary. This was achievedthrough secret negotiations that violatedIndia’s Electricity Supply Act. The projectfaced corruption allegations from its earlystages. During subsequent litigation, the HighCourt of the state of Maharashtra observedthat the state committee involved in the rene-gotiation ‘forgot all about competitive biddingand transparency’. The multi-billion dollarplant was mothballed in 2001 because its elec-tricity was turning out to be prohibitivelyexpensive, putting a lid on potential corrup-tion32 with the Maharashtra State ElectricityBoard deciding not to buy any more powerfrom it. Although the plant continued toremain idle for some years it is currently be-ing set up for reactivation.33

In the Philippines in 2005 an ADB studyfound that ‘deeply-rooted’ corruption wasincreasing costs of power projects, delayingtheir implementation and providing Filipinohouseholds and businesses with electricityservices that were both unreliable and expen-sive; two to three times the prices in othercountries.34 It said corruption was involvedin almost all phases of a project, from tender-ing and bidding to operation and maintenanceas well as in privatization and the awardingof independent power-producing contracts(Box 3.6).

Petty CorruptionPetty CorruptionPetty CorruptionPetty CorruptionPetty Corruption

Water supply, sanitation services, and elec-tricity supply offer economies of scale thatmake it technically more efficient to have asingle provider acting as a ‘natural monopoly’.And, particularly when the investment isbeyond the reach of private investors, the soleprovider is likely to be a public corporation.Whether provision is public or private, utili-ties tend to be local monopolies. This puts


‘informally’ by selling them water supplies,carrying out repairs for side-payments, falsi-fying meter readings, or making illegal con-nections. This can often lead to ‘needs-based’corruption; if poor people need supplies ofwater or electricity they have no choice but tocollude. A survey in Bangladesh found that60 per cent of urban households either paidmoney or exerted some form of influence toget water connections, and that nearly one-third of urban households had their waterbills reduced through an arrangement withthe meter readers.35 Consumers are oftenwilling to pay bribes just for convenience; evenhonest consumers will be discouraged by longqueues to pay bills and be tempted to turn to‘middle men’. For the simplest routine – legalor necessary functions such as obtaining aconnection – they may have no choice but tomake ‘grease payments’ or pay ‘tea money’ or‘speed money’ (Box 3.7).

BOX 3.6PRIVATIZATION: MIXED RESULTS IN INDONESIA AND THE PHILIPPINES

staff working for operators in a powerfulposition which, combined with shortfalls insupply, creates fertile ground for corruption.Officials can take advantage of the fact thatconsumers have nowhere else to turn. Staffmight, for example, supplement their salariesby colluding with clients to provide services

BOX 3.7DIRECT ACTION IN DELHI

Parivartan is an NGO that has helped people use satyagraha, a form ofnon-violent resistance, as a mechanism to fight corruption. When a cus-tomer of Delhi Vidyut Board got an inflated electricity bill, a Parivartanvolunteer accompanied him to the offices, but each time the officer wouldpolitely apologise for the delay and seek more time. On his final visit, thevolunteer replied, ‘Sir, I am not in a hurry. I have told my people at homethat I will not be back for a week.’ The officer replied, ‘But I have to gonow for a meeting with my Chief Engineer that will last till late in theevening.’ The volunteer said, ‘Sir, please don’t worry. I will keep sittinghere. When you come to the office tomorrow, you will find me sittinghere. You may go ahead with your meeting without worrying about me.’Unsurprisingly, he immediately got the revised bill issued and then wentfor the meeting.

Source: http://www.parivartan.com/satyagraha.asp

In most cities in the Asia-Pacific region, utilities and servicesare considered the domain of government, but in some casesthe utilities have been privatized. Faced with the deteriora-tion of public services, some metropolitan authorities haveargued that services should be priced and paid for accordingto their value. International financial institutions and aidagencies have supported this view and have advocated theuse of privatization schemes.

Metropolitan infrastructure and services often requiremassive capital investments. These lumpy capital requirementscan be met by public-private partnerships that may alsoincrease managerial efficiency and allow the application ofcutting-edge technological approaches.

In 1997, the ownership and management of the JakartaRaya and Metro Manila waterworks and sewerage systemwere transferred to joint consortia made up of internationaland domestic concessionaires. In both cities, the privatizationinitially resulted in considerable improvements. In MetroManila, the concessionaires installed 238,000 new water con-nections, 128,000 of which were in urban poor communities.New service connections that averaged only 17,040 per yearbetween 1991 and 1995 tripled to 53,921 between 1997 and2001. However, the 1997 Asian economic crisis hit thoseprivatized schemes that were heavily dependent on interna-tional financing. In both countries, sudden drops in the value

of currencies greatly expanded the foreign debts of the con-cessionaires. In Indonesia, the ousting of the Suharto regimeforced the withdrawal of one of the partners, including one ofSuharto’s sons, from the venture. In the Philippines, one ofthe domestic concessionaires declared bankruptcy and thegovernment had to sustain the operations of the watersystem.

Public officials, in collusion with private companies, mayalso see ‘prospects’ in the privatization of infrastructure. Forinstance, an advisor for public sector management andreform at the Asian Development Bank cites one Asiancountry that lost around $50 billion in ten years. This was aresult of corruption through undervaluing assets thatwere sold to local and foreign investors in return for com-missions.

On the other hand, officials at the lower levels may resistprivatization if they fear a loss of illicit income. In July 2001the then Prime Minister of Papua New Guinea, publiclydescribed both his own party and his government as system-atically corrupt for attempting to block the privatization ofstate assets on the grounds that this would reduce theiropportunities for exploiting public resources.

Sources: Agro and Laquian 2007; Evans 1997; Forbes 2001;Inocencio et al. 2001.


The transition from corrupt to cleaninstitutions can often be difficult. Bangladeshoffers a recent example. The current InterimGovernment says that one of the primaryobjectives of its administration is to tacklecorruption. It has implemented far reachingand effective measures to prevent, identifyand punish corrupt acts. However this hasinadvertently worsened the situation of thepoor since businesses are finally paying taxeson their products and passing these priceincreases to consumers. As a result there havebeen dramatic increases in the price of fishand rice, which are staples of the Bangladeshidiet. Many business leaders report that pro-cedures that used to require merely a bribe ora quick call to the right contact, now demandpaperwork in triplicate with multiple roundsof approvals. Thus although citizens havewelcomed the tough stance on corruption thissupport could be eroded by rising prices.36

For electricity supplies, much of thecorruption is linked to illegal connections

8. The customer submits the payment receipt to the plan-ning department which, after payment of a bribe,transfers the application along with other documents tothe underground department.

9. The underground department prepares a list of thematerial needed. This requires the largest bribe of all.

10. The contractor approved by the electric supply corpora-tion charges an official fee for installation of material atthe site.

11. The underground department prepares a final estimate.12. The customer pays a security deposit through an approved

bank, which is the official fee.13. The government electric inspector issues a test form, for

which there is a charge.14. When the contractor has completed the work and all

meters have been installed the operations departmentenergizes the line after payment of a bribe.

In total, getting a permanent electricity connection for amedium-sized complex requires over $4,000 – a significantproportion of which is bribes.

Source: Sohail (ed.) 2007.

Although citizenshave welcomed the

tough stance oncorruption this

support could beeroded by rising

prices

from the main line. Since this can be detectedquite easily, a middleman is needed to encour-age the electricity department inspector toturn a blind eye. In some areas almost allthese inspectors are corrupt. They may takesmall payments but these can soon add up. Insome countries around half the power dis-appears in the form of ‘system losses’. Onesurvey of power supplies in India found thatin the previous year 12 per cent of householdshad paid bribes to obtain services; of these,more than one-third had paid money to a line-men, while one-quarter had paid money to anagent or middleman37 (Box 3.8).

Problems of corruption can also occurwhen the utilities are privately run though thecontract may be obtained with a certainamount of ‘generosity’. The utilities companymay, for example, invite municipal staff tovisit its headquarters, paying for both theticket and stay. Nevertheless overall corrup-tion tends to be lower. The cities of Kolkataand Mumbai in India, for example, have had

BOX 3.8THE TORTUOUS PROCESS FOR GETTING AN ELECTRICITY CONNECTION

In South Asia, the process of obtaining a permanent elec-tricity connection for a new building or complex can involve along and expensive series of steps:

1. The customer submits an application to the electricsupply corporation through an approved contractor. She orhe must also submit to the planning department copies ofthe site plan of the plot, the approved plan of the build-ing, the National Identity Card of the plot owner, thelease of the plot and sale deed for the plot along with anagreement to pay for the connection.

2. The planning department issues a load regularizationagreement (LRA) in favour of the land owner.

3. The customer sends an LRA to the chief engineer of theelectric supply corporation for approval. This requires abribe.

4. The approved LRA is then sent back to the planningdepartment.

5. The planning department prepares a supplementaryestimate requirement, which requires another bribe.

6. The estimate is given to the approved contractor to payofficial charges.

7. The payment is sent through an approved bank.


Corruptionundermines thelong-term financialstability of utilities

private utilities for decades and their com-mercial procedures tend to be better thanthose of state-owned corporations. They alsohave stronger accounting systems that dis-courage theft. As a result their ‘commerciallosses’, including those from theft, areusually around only 15 per cent – half ofthose incurred by the state-owned utilities,which are typically in the range of 30 per centto 35 per cent.38 Also in India, the state ofOrissa privatized the distribution of electric-ity several decades ago and has benefited fromsignificant improvements in billing andcollection. Even so, a review of the perfor-mance of the utilities conducted by the OrissaElectricity Regulatory Commission in 2005showed that the company was still losingsome $240 million per year as a result ofcorruption, mainly from stolen electricity andalso from inadequate metering, billing andcollection.39

The Costs for WThe Costs for WThe Costs for WThe Costs for WThe Costs for Water andater andater andater andater andElectricity SupplieElectricity SupplieElectricity SupplieElectricity SupplieElectricity Suppliesssss

Corruption thus costs the water and electric-ity sectors millions of dollars every year,diminishing a country’s prospects for provid-ing services for all. Globally it is estimatedthat corruption in the water sector absorbs20 per cent to 40 per cent of all funds,40

while corruption and theft in the electricitysector each year costs another $40 billion.41

Losses on this scale cause significant damage:

Inefficiency. Corruption seriously underminesthe performance and effectiveness of bothpublic and private sectors, discouraging theinvestment urgently needed to improvesupplies. In one major city in the region it hasbeen alleged that the public utility held backon improving water supplies in the areassupplied through kiosks or hydrants, for fearof losing the side payments that the hydrant

operators paid to utility officials.42 Theoperators of water tankers are oftencontrolled by powerful mafias that capitalizeon inept water distribution systems and haveeffectively privatized the supply: after payingcorrupt officials to turn a blind eye, they sellthe water to hotels and other businesses.43

Warped distribution. Corruption skews deci-sions on who is likely to get services. Residen-tial suburbs, for example, can be left withoutwater because the supply has been siphonedoff to service the farm of a prominentpolitician.

Capital-intensive investment. Corruption alsobiases investment towards large new infra-structure projects and away from smallerscale but less lucrative investment in the re-habilitation of systems or in improving op-eration and maintenance.

Weak finances. Corruption undermines thelong-term financial stability of utilities andthus their ability to offer reliable services to awider population, while also diverting govern-ment revenues that could be used to improvewater supply and other services.44

Environmental damage. Corruption con-strains overall water-resource management byencouraging inefficient use of freshwater orover-extraction of ground and surface water.

Public health. Reducing supplies of drinkingwater directly undermines public health, andmore so for the poor. Corruption in utilityservices can also undermine standards ofhealth. In the Republic of Korea, for example,in order to avoid paying the costs of recon-struction of underground water sites, waterquality testers were bribed to provide fake testresults. Subsequently 1,753 water sites werefound to have contaminated water, with high


Women-headed andother poorer house-

holds are likely tobe less aware of

where to file acomplaint

levels of nitrates, which can cause a conditionknown as methemoglobinemia or ‘blue baby’disease.45 Erratic electricity supplies to healthcentres and public hospitals also underminebasic and emergency care.

Lower income potential. Opportunities forsmall and micro-enterprises are restrictedwhen electricity is expensive, erratic orunavailable, particularly for the poor in semi-urban and rural areas and in urban slums.

Hardship for households. Erratic and expen-sive electricity make it difficult to get suffi-cient heating and lighting. Children will thusfind it difficult to study in the evenings.

Effects on Poor PeopleEffects on Poor PeopleEffects on Poor PeopleEffects on Poor PeopleEffects on Poor People

The most damaging effect is on the lives ofpoor people through high prices. As oneconsumer said to a researcher for this report:‘It is really tough for a day labourer to pay ahigh price for electricity and water. You knowit is not possible to get electricity and waterconnections without bribes or extra money.So our budget is strained and we cannotafford to meet our needs. We cannot save any-thing for our future either.’ Others said thatthey had been deprived of basic foodstuffs,medical facilities, incurred business losses andinterrupted children’s education because theyhad to spend money on bribes. In thesecircumstances many poor people feel power-less and helpless.46

Although corruption affects both sexes,it can present particular difficulties forwomen-headed households. Service providersmay, for example, be more inclined to demanda bribe from women whom they consider tobe more susceptible to coercion, violence orthreats. Women are also at risk of sexualharassment, women-headed and other poorerhouseholds are likely to be less aware of whereto file a complaint.

For the poorest people, even low-qualityservices tainted by corruption are, of course,better than nothing. So any sudden enthu-siasm for clamping down on corruption at theconsumer end – by cutting off illegal connec-tions in slum areas, for example – would leavethem with no services at all.

Uprooting Corruption in UtilitiesUprooting Corruption in UtilitiesUprooting Corruption in UtilitiesUprooting Corruption in UtilitiesUprooting Corruption in Utilities

Many of the strategies for uprooting corrup-tion involve greater investment in services tominimize the shortages that encourage peopleto pay bribes. Public corporations need to im-prove standards of management and operatein a more transparent fashion. But consum-ers too can take direct action to get betterservices. Some examples from around theregion including in sanitation (Box 3.9):

A single window cell in India. At the end of the1990s the Hyderabad Metropolitan WaterSupply and Sewerage Board introduced anumber of customer-focused service deliveryreforms. This included a process of consoli-dated applications for new connections – pre-viously a major source of corruption. Ratherthan filing an application in their localdistrict office, customers now go to theBoard’s headquarters to a ‘Single WindowCell’ (SWC) which manages all the relatedactivities, such as obtaining a road-cuttingpermit or land surveying. The Board pub-lishes the fee schedule for various plot andconnection sizes in its office and in the press,thus reducing the opportunities for staff tolevy excess charges. The process has beendesigned as a one-visit operation so thecustomer rarely leaves the SWC without an‘application token number’, the equivalent ofa receipt for acceptance of the application.

Grass root monitoring – in Pakistan. For manydecades, institutional decay and corruptionin Pakistan resulted in poor public water,


for the poorest people in the city has risenfrom 100 to over 13,000.48 This has beenachieved by creating an autonomous andtransparently-run authority in which thestaff are given greater responsibility and arepaid according to financial performance. Al-though the tariffs were increased, these wereused to subsidize connections and bills for thepoorest people. Automated billing and collec-tion systems have replaced the often corruptbill collectors. Inspection teams penalize thosewith illegal connections, which encouragespeople to report them. Customer service hasalso been improved with a free phone numberand a 24-hour repair team for water leakages.Any staff associated with illegal connectionsare removed or punished immediately. Moreimportantly, staff are not seen as a source ofthe problem but as a major part of thesolution.

Clean energy in Bangladesh. The Rural Elec-trification Board and its rural electriccooperatives (Pally Bidyut Samities, or PBS)are expanding electricity services in rural

BOX 3.9UPROOTING CORRUPTION IN SANITATION

Corruption in the sanitation sector is generally less welldocumented and understood than in water supplies. This ispartly because most sanitation systems, in rural areas inparticular, are likely to be based on individual septic tanksor pit latrines that are installed or purchased by eachhousehold.

Corruption is most likely to occur, however, in the installa-tion of capital-intensive sewerage networks in citiesgenerally to serve high-income neighbourhoods. Even inhousehold sanitation projects, there are opportunities forcorruption when the government offers subsidies for latrineconstruction. Corrupt officials can direct these subsidies torelatively less poor families. Contractors brought in to do thework can over charge for construction, or use cement thatcontains too much sand. It is estimated that 20 per cent to 30per cent of funds and materials are diverted from sanitationprogrammes due to corruption and dishonesty.

One example of efforts to reduce this type of corruptioncomes from Kerala in India. In 2003, the Socio-Economic Units

Staff are not seenas a source of theproblem but as amajor part of thesolution

sanitation and electricity services. Thisprocess in turn fuelled citizens’ mistrust ofGovernment and politics. In response, theGovernment in 1999 embarked on a massivenational reconstruction process which in-cluded devolving powers to the grass roots,restructuring federal and provincial adminis-trations and reforming the civil service. Aspart of this the Government also introduced,along with direct involvement of the benefi-ciaries, a system of social audits to evaluatethe outcomes. The government hoped thatthese audits would increase transparency andhelp reduce some of the mistrust while alsomonitoring the delivery of services. Donorstoo were attracted by these audits whichwould help measure the impact of theirsupport programmes.47

Cleaner water supplies in Cambodia. ThePhnom Penh Water Supply Authority hasimproved hugely over the last decade with thecoverage in the city increasing from25 per cent to 90 per cent. Between 1999 and2006, the number of household connections

Foundation (SEUF), a non-profit organization, workedtogether with local governments to carry out a subsidizedsanitation programme, serving poor families. This ensuredthat local people understood the system which could then bemonitored by different groups such as water and sanitationcommittees, women’s groups and youth groups as well ashouseholds and local government. The programme useddifferent ways to control spending such as public and openselection and multiple tenders, independent audits whichrequired double signatures on receipts and surprise spot-checks of suppliers. Monitoring and mapping exercises werecarried out with cross-checking to ensure validity and stopthe flow of subsidies to ineligible households. This experienceshowed that triangulation is essential in ensuring the honestallocation of subsidies. Overall, up to 20 per cent could besaved on construction costs while improving the quality ofsanitation facilities.

Source: Water Integrity Network 2006.


areas. They have protected themselves fromcorrupt practices through a number of inno-vative arrangements. First the Board of eachPBS is selected by consumers. Then the meterreaders are hired on one-year contracts thatcan be extended to three years with good per-formance, after which the meter reader hasto seek a different career, which is not diffi-cult if they have a good record. Every year themanagement of each PBS negotiates an agree-ment that includes targets for system loss,collection efficiency, revenue and cost ofsupply per kilometre of line and debt repay-ment. The PBSs use independent consultingfirms to survey rural areas, identify potentialconsumers and design the electricity distribu-tion network. They also display on a noticeboard the list of lines to be installed, toreduce the risk of corruption and nepotism ininvestment decisions and help to avoidconstructing uneconomical lines.

Reducing collusion in Pakistan. The LocalGovernment and Rural DevelopmentDepartment (LGRDD) in Azad and JammuKashmir, Pakistan works in remote areas ofthe state, but keeps a tight rein on activitiesthrough field visits and biannual meetings. Ithas eliminated private contractors for all butthe most technically complex of the 1,260schemes; instead, its technical staff workwith community members who provide therequired labour and organize the purchase ofsupplies. In sum, it has limited the opportu-nities for ‘cream skimming’ and collusion.Moreover, the staff take great pride in theirwork and in reducing corruption. Most tech-nical staff were not told at the time of theirhiring that they would have to do so much

community work. ‘I thought I was hired asan engineer,’ one employee recalled. ‘Then Ifound out I was going to be an engineer, acommunity organizer, a policeman, and alabourer.’ Over time, technical staff haveformed close bonds with the communities towhich they are assigned.49

The Right to ServicesThe Right to ServicesThe Right to ServicesThe Right to ServicesThe Right to Services

Corruption is undermining a whole range ofpublic services, siphoning off much neededfunds that could be used to invest in betterstandards of health and education and moreefficient and cheaper public utilities. Much ofthis corruption is tied up with procurement,as companies pay bribes for public contractsfor major construction projects. People acrossthe region often have to pay bribes just toobtain services which should be theirsby right.

Many of the problems are linked to lowinvestment which creates shortages thatpublic workers can exploit – allocating scarceresources to those who are prepared to pay.Reducing corruption in health, education andother government services will require actionfrom above and below. From above, govern-ments will need to ensure more transparentand better managed services; from below,users can work together to resist demands forbribes.

So far few countries in the region havebeen able to approach the issue in a compre-hensive and consistent fashion. There are,however, many cases in which governmentshave been able to introduce more efficient andtransparent systems and citizens have unitedto demand their rights.

Technical staff workwith community

members whoprovide the requiredlabour and organize

the purchase ofsupplies

A tilted load won’t reach its destination.AFGHAN PROVERB

CHAPTER 4: STSTSTSTSTOPPING LEAKAOPPING LEAKAOPPING LEAKAOPPING LEAKAOPPING LEAKAGES IN FINANCIAL AND MAGES IN FINANCIAL AND MAGES IN FINANCIAL AND MAGES IN FINANCIAL AND MAGES IN FINANCIAL AND MATERIAL AIDTERIAL AIDTERIAL AIDTERIAL AIDTERIAL AID 7979797979


Stopping LeakagStopping LeakagStopping LeakagStopping LeakagStopping Leakages in Fes in Fes in Fes in Fes in Financialinancialinancialinancialinancialand Material Aidand Material Aidand Material Aidand Material Aidand Material Aid

44444

Much of themomentum for

political transitionsoften derives from

public outrage atperceived corruption

Financial and material aid in emergencyresponses, longer term developmentsituations, and social safety net programmesare of particular relevance for the mostdisadvantaged. Emergencies such as conflict,natural disasters or sudden changes inpolitical configuration – sometimes referredto as ‘special development situations’– oftenbring out the best and the worst of humanbeings. Unarmed resistors in conflicts bravelyconfront their tormentors. Many people innatural disasters risk their lives to saveothers. Public servants will frequently remainat their posts, serving their communitieswhile foregoing easy opportunities to reapmaterial rewards for themselves. Neverthe-less, there are also people who take advantageof opportunities to enrich themselves whenlarge amounts of cash and goods have to betransferred, sometimes very rapidly and withfew administrative controls. Corruption canaggravate the impact of crises and underminesocial safety net schemes. In turn, the availa-bility of no-cost or low-cost aid can createconditions for corruption.

Over the past decade, most special devel-opment situations in the Asia-Pacific regionhave been linked to conflict – and havegenerally occurred in countries with the low-est levels of human development. As Table4.1 shows, these also tend to be territories

Governments and international agencies frequently have to respond with large-scale programmes,disbursing funds or materials to help people in difficulties. This may be the result of emergencies,arising from conflict or natural disaster, for example, and referred to as ‘special developmentsituations’. Or they may be giving longer-term assistance in the form of ‘social safety nets’. Ineither case, resources destined for the poor risk being diverted by corruption.

with the lowest rankings in the World Bank’scontrol of corruption index (CCI). It seemslikely therefore that many of these conflictsare linked to poverty and to the capacity andintegrity of governance. Countries with lowlevels of corruption tend to have morecoherent states with stronger social fabrics.Struggles between competing interests, there-fore, are less likely to degenerate into destruc-tive or violent conflict.

Corruption, on the other hand, tends tobreak the trust between the governing and thegoverned as well as sow dissension amongcommunities. Indeed much of the momentumfor political transitions often derives frompublic outrage at perceived corruption orabuse of authority. This has been evident inthe mass protests that lead to some of theregion’s major political transitions, as in thePhilippines (1986 and 2001), in Indonesia(1998) and in Thailand (2006).

It can also be argued that corruptioncontributes not just to political instability butalso to the impact of natural disasters. Whilethe forces of nature such as earthquakes andvolcanic eruptions are largely unpredictabletheir likely effects are well understood andcan be anticipated. Stronger states can there-fore mitigate the damage by enforcing con-trols, closing certain areas to developmentand enforcing building controls. Corruption


undermines these efforts by allowing uncon-trolled development and compromisingbuilding inspection practices. Perceived levelsof corruption were found related to the earth-quake death toll in a review of the impact of344 large-scale earthquakes in 42 countriesover a 28-year period, worldwide.1 The linksbetween corruption and disasters are evenclearer with localized disasters, such as land-slides that result from illegal logging or thedestruction of fishing resources as a result ofpollution from industrial zones upstream.

EmerEmerEmerEmerEmergggggency Responsesency Responsesency Responsesency Responsesency Responses

Despite their significant differences, mostspecial development situations have anumber of similarities. The most obvious isan extraordinary event, which leads to abreakdown of regular social, economic and orpolitical interactions and the assumptionsthat underpin them.

In the case of short-term emergencies thisbreakdown is further complicated by thearrival of international agencies typicallyunder pressure to spend fast. The multi-plicity of newly arrived international agencies(UN, donors, IFIs, NGOs, contractors, etc.)can also be highly aggressive in seeking toestablish their programmes and disburse theirresources. They can also be eager to positionthemselves against the ‘competition’ and movequickly with flagship projects or face the riskof losing funds. This reduces the time avail-able for substantive programme planning andrisk analysis – problems compounded by highrates of staff turnover. The diversity of adminis-trative systems among agencies makes itdifficult to keep track of funds and supplies.

This is most evident in procurement.Usually organizations operate with standardmarket principles of predictability of price,quality and availability. They are expected tomake purchases at the lowest price with high-est quality and anticipate subsequently being

TABLE 4.1ASIA-PACIFIC COUNTRIES, BY CCI RANKING AND

EXPERIENCE OF CRISIS SITUATIONS

CCI rank HDI rank Special development(2006) (2005) situation

High CCI ranking

New Zealand 4 19 None

Singapore 5 25 None

Australia 11 3 None

Hong Kong 16 21 Stable political tran-(SAR), China sition through

return to China

Japan 21 8 None

Macao (SAR), 64 – Stable politicalChina transition through

return to China

Taiwan, Province 62 – Noneof China

Republic of Korea 74 26 None

Malaysia 67 63 None

Low CCI ranking

Timor-Leste 166 150 Conflict followed bytransition to sover-eign independence

Viet Nam 147 105 None

Nepal 155 142 Political transitionlinked with politicalinsurrection

Philippines 151 90 Separatist/sectarianconflict

Indonesia 159 107 Political transition,separatist/sectarianconflict, major naturaldisaster

Papua New 188 145 Separatist conflictGuinea

Pakistan 170 136 Political transition,regional conflict andlarge scale disaster

Cambodia 192 131 Post-conflict consoli-dation

Bangladesh 197 140 Political transitioncommencing

Myanmar 205 132 Sectarian conflict

Sources: Evans 2007; UNDP 2007a; World Bank 2007b.


audited. These regulations may be relaxed oreven set aside during an emergency as manymore resources arrived from many differentdirections and often travelling throughunfamiliar channels. Combined with theimperative to spend fast, this produces an en-vironment which is susceptible to corruption.

International agencies may also have thedisadvantage when they are unfamiliar withexisting networks of patronage and de factolocal business models. They may end upselecting staff and partners who have ques-tionable local reputations. At the same timethe agencies may try to curry favour withlocal administrators by offering salary top-ups, special training or international travel.Local people, on the other hand, are morefamiliar with the terrain but they can havethe disadvantage of not knowing how recov-ery programmes operate. This asymmetry ofknowledge can easily degenerate into mutualmistrust, including mutual perceptions ofcorrupt behaviour.

Does this matter? Many people argue thatanti-corruption efforts regarding emergenciesare second-order priority compared withbuilding up functioning institutions. Interna-tional actors typically overwhelm localabsorptive capacity by trying to do too manythings at once. Shouldn’t they try to createthe basic institutions first and clean them uplater, dispensing international funds quicklyrather than carefully?2 Others see this per-spective as naïve, if not downright irrespon-sible, arguing that international agencies andNGOs should never immerse themselves inquick and dirty deals that disregard thelonger-term damage in terms of communitypractice and expectation (Box 4.1).

LongLongLongLongLongererererer-T-T-T-T-Term Special Deverm Special Deverm Special Deverm Special Deverm Special Development Situationselopment Situationselopment Situationselopment Situationselopment Situations

Longer-term processes, linked either to ongo-ing conflicts, post-conflict situations or sud-

den changes of political configuration, raisemany of the same issues. For instance, thereis a usually multiplicity of agencies who try toapply normal controls in an abnormalenvironment.

Governments and international agencieshave to consider how the misuse of resourcesrelates to efforts to achieve reconciliation andbuild peaceful societies. In this case there is atemptation to be more tolerant of corruption,allowing antagonistic groups to share thespoils as part of buying a kind of temporarypeace. The pragmatic argument in favour ofthis practice is that it demonstrates that ‘allhave a stake in the system’ and leads to somesense of immediate commitment to the initialpeace process which, is hoped to deepen intime.

But this is counterproductive: such ‘peaceagreements’, in fact, usually contain the seedsof future corruption. Practices such as divid-ing up ministries among differing conflictprotagonists can often lead to a kind of‘balkanisation’ of the civil service, subvertingany commitment to a merit-based administra-tive system by institutionalizing patron-clientrelationships. Ultimately, it is likely to repli-cate the fault lines of the earlier conflict.At times, war veterans and returning exilesmay see reconstruction as a ‘payback’ scheme,using wartime sacrifices to ‘justify’ misuse ofpublic offices and positions.3

Evidence from a number of countriesshows that neglecting the corruption problemfrom the outset is a dangerous strategy, allow-ing corrupt elites to entrench themselves inpolitics and set up predatory schemes that areextremely difficult to eliminate later on. Asin post-conflict environments, there can alsobe a major shift in patterns of economicownership which opens up opportunitiesfor corruption. For example, Indonesia inthe wake of the Asian financial crisis,nationalized most of the large private banks

In post-conflictenvironments, there

can also be amajor shift in

patterns of econo-mic ownership

which opens upopportunities for

corruption


When corruption isseen as common,even ‘normal’, itbecomes difficultand complex toreduce

along with some of the businesses that hadtaken loans from them. The subsequentprocesses of asset consolidation, restructur-ing and (re)-privatization challenges werefraught with problems related to integrity andcorruption.

Along with the regime change, there isalso the danger of shifting from one form ofcorruption to another. Corruption occurs inmany centralized authoritarian regimes,because they lack the safeguards to curbabuses and exploitation of state assets bymilitary officers or politicians and theircronies.4 In a more democratic environment,

the new government may on the other handchoose to privatize state assets – public utili-ties such as water, electricity, telephony andtransportation – only to see these capturedby local, corrupt elites.5

Whatever the type of government, in someways when it comes to corruption the percep-tion is arguably even more important thanactual prevalence, since it can become a self-fulfilling prophecy. When corruption is seenas common, even ‘normal’, it becomes diffi-cult and complex to reduce. Another commonfeature of a corrupted environment is agrowth of cynicism in response to the gulf

BOX 4.1CONFRONTING THE DOUBLE WHAMMY IN ACEH

The earthquake and tsunami which struck Aceh and the is-lands of Nias on 26 December 2004 claimed the lives of 30 percent of the provincial capital and similar losses in at least twoother districts. Overall 170,000 of the region’s 4.7 millionpeople were lost. In Aceh, this natural disaster also tookplace against a backdrop of long-term violent and separatistconflict with all the usual breakdowns in social trust and sys-tems that such conflicts cause. Collectively this represented areal double dose of human misery for the people of Aceh.Each of these disasters, namely natural calamity or conflict,can normally be expected to give rise to special concerns aboutthe potential for reconstruction activities to be subverted bycorruption. Together these dynamics amplify the threats ofcorruption.

Indeed evidence of a pre-existing corruption problem priorto the tsunami was seen through the prosecution of the thenGovernor of Aceh. This clearly demonstrated that corruptionrepresented a real and serious threat to the post-tsunami re-construction programme.

To pre-empt this potential threat, the Government designedthe dedicated post-tsunami reconstruction executing agency,known by the Indonesian acronym of BRR, with an eye forways to avoid some of the usual traps. Among these, was theestablishment of a special and dedicated Treasury Office ofthe Ministry of Finance to manage all BRR payments. Thishas significantly reduced the costs and time delays that en-courage people to cut corners to manage funding issues.

Substantive oversight is a key ingredient to any effectiveintegrity system. To this end, the establishment of a dedicatedBRR Oversight Council as well as a BRR Steering Councilprovides institutional mechanisms to ensure financial andpolicy compliance from the BRR Executing Agency. The Na-tional Parliament has also established an active committee tomonitor BRR activities.

Elsewhere at the institutional level, the Supreme AuditAgency has now established a permanent office in Aceh. Todemonstrate further seriousness on countering corruption, theCorruption Eradication Commission has also established apresence in Aceh.

Within the BRR Executing Agency, we radically adjustedthe remuneration system for staff, scrapping numerous dis-cretionary stipends and top-ups to provide a single income.This reform has allowed us to both retain staff and also toestablish integrity controls and initiate staff productivity con-tracting.

To assist in the maintenance of systems of integrity, weestablished an Anti Corruption Unit first. It operates on thebasis of preventing potential deviations including offering sug-gestions on correcting system weaknesses. The Unit alsoprovides education on corruption-related issues to staff as wellas to the wider public and passes information on possiblecases of corruption directly to the Corruption EradicationCommission.

We in BRR see the fight against corruption in Aceh andNias as advancing Indonesia’s wider struggle against corrup-tion. We recognize that this task is very difficult, particularlyin a post-conflict situation where there is a need to build notjust physical infrastructure but also the social fabric of thecommunity and their government. We believe firmly thatcorruption both robs disaster victims of the support they needand also undermines ongoing and future support from gener-ous external supporters. In this regard, corruption is bothmorally wrong and also undermines programme success. Cor-ruption does not grease the wheels; it is a spanner in theworks.

Kuntoro MangkusubrotoDirector, Executing Agency, BRR

Source: Evans 2007.


Corruption during aspecial development

situation is oftensustained by a

culture of silence

between how the system should operate andhow it actually does.

The Culture of SilenceThe Culture of SilenceThe Culture of SilenceThe Culture of SilenceThe Culture of Silence

Corruption during a special developmentsituation is often sustained by a culture ofsilence (Box 4.2). Many local people or aidworkers may be reluctant to report cases ofcorruption. They may, for example, fearretribution from political forces or be nervousthat donors or parliaments back home willconsider their programmes to be failing.6 Orthey may simply not see the point of protest-ing if the legal system is weak and lacks aneasily identifiable mechanism for lodgingcomplaints.

On the other hand, international agenciescan also be vulnerable to false accusationsagainst the non-corrupt in order to intimidatethem or extort favours in the form of jobsor programme resources. Sorting genuinecomplaints from the fake ones is particularlydifficult when an ill-informed, gullible orunethical media are quick to broadcastslanders.

Recommendations for SpecialRecommendations for SpecialRecommendations for SpecialRecommendations for SpecialRecommendations for SpecialDevelopment SituationsDevelopment SituationsDevelopment SituationsDevelopment SituationsDevelopment Situations

How can corruption be minimized duringspecial development situations? As withcorruption in other sectors, greater transpar-ency in governance and closer monitoringwould apply some needed discipline. Butthere are also steps that can be taken to mini-mize the opportunities for corruption. Aprogramme that does not deliver a certainpercentage of allocated resources need not beconsidered a failure when compared to aprogramme that is expended fully, but badly.

Extending deadlines. One of the most impor-tant steps towards reducing the pressure to

spend ‘fast and furious’ is by extending dead-lines. This would need some kind of interna-tional agreement – between bilateral andmultilateral agencies and NGOs as well asrepresentatives of the governments likely tobe recipients of international emergencyassistance. UNDP or the Development Assis-tance Committee of the OECD might take theinitiative.

Paying for controls. All programmes havelegitimate management costs so donorsshould be made aware of the need to pay forfiduciary controls. Cutting costs to claim thatevery cent goes to hungry children is self-defeating if resources end up being stolen ormisdirected. Indeed recent studies suggestthat auditing ensures that more money goesto those in need.7

Active communications. Communicating withbeneficiaries and other stakeholders, includ-ing local and national authorities is impor-tant. Apart from computer based systems,publication through print media, use of broad-cast media, local information boards, publicmeetings with local communities providinginformation, etc. are means to limit corrup-tion. Setting realistic expectations is animportant factor in building trust. Thisargues strongly for public education to

BOX 4.2SEX FOR FOOD SCANDALS

Corruption does not involve money alone. During and after conflicts,peacekeeping forces and aid workers who find themselves in a positionof authority and control have exploited vulnerable women and childrenby demanding sex in exchange for food or other resources. Refugees andother displaced people who commonly lack the documentation needed toprove their entitlement to food, health services or shelter may be obligedto exchange sex for survival. This is partly a reflection of the breakdownof social norms and prohibitions that would normally be a constrainingforce in a society.

The organizations need to replace these missing managerial andpersonal controls and build effective processes for complaints, includingprotection for whistle-blowers.


People need toknow how to lodgea complaint, whatto expect and whatfuture obligationsmay emerge

Work with established local NGOs. Duringconflicts NGOs have often continued todeliver public services as substitutes forcollapsed government. Their establishednetworks, internal systems and proceduresoffer some hope of integrity control. Localauthorities or agencies such as universitiescould be mobilized to identify reasonablenessof input prices.

Supreme audit agencies. At the formal level,there may be great value in bringing togetherthe supreme audit agencies of official donornations to work with those of the affectedsociety.

Complaints management. Key agencies, work-ing with existing local or national entitiesshould establish a joint and credible com-plaints system. People need to know how tolodge a complaint, what to expect and whatfuture obligations may emerge. They alsoneed to know the legal limits of investigativeauthorities.

Social Safety Net ProgrammesSocial Safety Net ProgrammesSocial Safety Net ProgrammesSocial Safety Net ProgrammesSocial Safety Net Programmes

A number of countries in the region havesocial safety net programmes. Some aretemporary, having been created in responseto emergencies, while others are ongoing toprovide the poorest citizens with some verybasic security. These interventions vary fromsupplementary feeding for undernourishedchildren to pensions for the old and disabled.They can also range from support to farmersthrough subsidies for seeds, fertilizers andwater to providing income through unskilledemployment in public works programmes. Inthe last years, microfinance has also becomea widespread approach to reach out to thepoor (Box 4.4).

Although such programmes generallymake a valuable contribution, they are also

BOX 4.3AID WATCH IN SRI LANKA

One of the challenges of delivering recovery in crisis situations is thatthe needs and interests of the affected themselves are not reflected inthe planning and implementation of projects, resulting in a severe dis-connect between their delivery and the corresponding needs on theground. This not only contributes to delays, wastage and higher inci-dences of corruption but also feeds into existing feelings of isolation anddisillusionment among the affected.

Recognizing the need for including the voices of those affected in thetsunami recovery process and for empowering the communities to beagents of their own recovery, UNDP Sri Lanka launched the AIDWATCHinitiative in 2005. The objective of this initiative was to strengthencapacities of beneficiaries to monitor the implementation of projects un-dertaken on their behalf and to ensure their accountability and transpar-ency. Under this initiative, a representative sample of beneficiaries wasselected and provided with basic awareness on their claims vis-à-vis de-velopment activities alongside basic advocacy and negotiations skills.These groups were also brought into contact with relevant project staffin the field and in Colombo, as well as with local government authoritiesand local Human Rights Commission representatives. Equipped with newawareness, skills and networks, these beneficiary collectives were em-powered to play an active role in monitoring the progress of the project.They had greater access to local authorities in securing their public ser-vice needs and had strengthened access to grievance-redress mechanisms,for example, through the Human Rights Commission, in the event thattheir needs were not been met. Initially five pilot AIDWATCH initiativeswere set-up in Galle, Moratuwa, Trincomalee, Jaffna and Batticaloa, al-though many of them had to be scaled-down due to the worsening con-flict situation.

represent one core component of thecomplaints management approach (Box 4.3).

Engage in long-term procurement. Respondingto natural disasters involving large-scaleinternational business can be based on long-term contracts with prime contractors, whoshould be required to engage and build thecapacity of local businesses.

Establish principles of ‘reasonableness’. Ratherthan aiming at fiduciary standards, agenciesshould instead aim to ensure that their activi-ties and the prices they pay are ‘reasonable’under the circumstances. The term is neces-sarily vague but does at least correspond tothe normal situation. This can be based onreal-time evaluations that provide simulta-neous recommendations to staff.


BOX 4.4CORRUPTION IN MICROFINANCE

Officials may alsocollude with

contractors to issuebills for inflated

quantities ofmaterials or food

distributed

vulnerable to corruption. This is primarilybecause they involve better off, better-connected and better-educated people organiz-ing the distribution of public resources topeople who are usually semi-literate and poorand therefore powerless and often unawareof their full entitlements. Moreover, as subsi-dies are involved, the beneficiaries, even whenaware of their entitlements, do not alwaysprotest even when some diversion takes place– better to get something for free rather thannothing at all.8 Not surprisingly, some of theresources ‘leak’ along the way or are directedtowards some less deserving groups. Thus,both types of errors take place compoundedby corruption through the exclusion of theeligible and inclusion of the ineligible.

This corruption can take many forms. Itcan, for example, appear at the outset whenpeople have been asked for money to get theirnames registered or have to pay for their job

cards and photographs, which are supposedto be free. Those organizing the schemes mayalso enrol non-existent workers or falsify thenumber of hours worked, or underpayworkers or give them less food than they areentitled to. In labour-intensive work, supervi-sors can cheat on the volume of work doneand on the number of people employed. Veryoften, workers themselves are willing to givea percentage of their wages to project officialsand local elites, because what they get fromprojects by way of wages is usually more thanwhat they would get paid by local landlordsand other employers.

Officials may also collude with contrac-tors to issue bills for inflated quantities ofmaterials or food distributed. Contractorsostensibly running outlets for subsidizedgrains for the poor, can sell much of this onthe open market at inflated prices. But cor-ruption is not limited to public officials and

respondents who had taken a microfinance loan may havebribed the provider.

Another form of corruption is inflating the prices of assetswithin in-kind loans. Instead of directly giving cash the bankprovides an asset such as a buffalo – but at a much higherprice than the market rate, with the lender or agent pocket-ing the difference. Not surprisingly, many of the borrowersstruggle to repay such loans.

Addressing corruption in microfinance will require muchbetter monitoring – which can now be helped with appropri-ate software. PRADAN, for example, an NGO microfinanceinstitution in India, is significantly improving its group re-payment performance in this way.

The strongest guarantee is to ensure that microfinanceinstitutions operate in a transparent fashion. Recently a con-sortium of aid agencies and microfinance institutions of theConsultative Group to Assist the Poor (CGAP) and the mem-bers of the Small Enterprise Education and Promotion Net-work, have developed disclosure guidelines specifying the fi-nancial information that microfinance schemes should report.The CGAP recommends donor members make their supportconditional on full compliance with these guidelines.

Sources: Azfar and Azfar 2007; Littlefield et al., 2003; Sarangi2007.

One of the most popular tools for addressing poverty nowa-days is microfinance – small loans to individuals and groupswho would not normally qualify for direct, commercial bankloans. By 2006, across the Asia-Pacific region, such schemeswere reaching 98 million people – who received 85 per centof such loans globally. Evaluations of the social and economicimpact of these schemes have shown them to be very success-ful – achieving better nutrition and improved health out-comes, helping the poor to send their children to schoolsand improving gender equity through the empowermentof women.

There have been fewer assessments of their vulnerabilityto corruption. This is partly because many do not work in alargely transparent fashion. However, two case studies, onefrom India and the other from Indonesia, have demonstratedthe risks. In India, corruption prevails in some government-backed lending schemes. In some cases, collusion betweengovernment agents and bank officials results in leakages, forinstance, demands of 10 percent of loans amount as bribes.The borrowers do not usually complain because they considerit standard practice. Since the government guarantees theloans, the bank is assured of the return of its principal atleast. A survey of 10 groups that had taken loans from banksfound that all of them had reported bribery as a precondition.Similarly, a study from Indonesia found that 15 per cent of


Often the targetingis based on theassessments oflocal officials whocan classify theirown less deservingfriends or family asqualifying forassistance

the private sector. In some Pacific Islands, forexample, it is found even among civil societyorganizations.9

In the 1990s, in an effort to use resourcesmore effectively, public transfer programmesmoved from universal provisioning to highlytargeted transfers. This, however, assumes anaccurate and fair basis for targeting, whichmay not always be available. Often the target-ing is based on the assessments of local officialswho can classify their own less deservingfriends or family as qualifying for assistance.In-kind targeting seems to be more corruptionprone than simple cash transfers. It involvesprocurement and distribution of food grainsinvolving private contractors who can short-change the poor by giving them substandardfood supplies and under-weigh the quantitiesthat they are supposed to supply. An ESCAPstudy, for example, concluded that in somecountries in Asia resources lost through leak-ages range between 50 to 70 per cent.10

Uprooting Corruption in Social SafetyUprooting Corruption in Social SafetyUprooting Corruption in Social SafetyUprooting Corruption in Social SafetyUprooting Corruption in Social SafetyNet ProgrammesNet ProgrammesNet ProgrammesNet ProgrammesNet Programmes

With such negative experience in targeting, anumber of schemes are moving away fromtraditional methods. Instead, more are usingforms of ‘self-selection’, for example, byoffering work or wages that only the very poorwill accept. Similarly, for food distribution,schemes can buy cheaper but nutritiousstaples such as sorghum rather than distri-buting expensive grains such as highlyprocessed rice and wheat. A number of coun-tries have also improved the efficiency of suchschemes by ensuring greater communitycontrol and social audits. These include:

Women’s self-help groups in India. In severalparts of India, particularly in Orissa,women’s self-help groups are being supportedto procure local produce for mid-day meals

for school-going children. They not onlypurchase fresh supplies grown by localfarmers, particularly women, but also cookand serve to children. This has considerablyreduced leakages.11

Integrated services in the Philippines. In 1994the Department of Social Welfare and Devel-opment launched the Comprehensive andIntegrated Delivery of Social Service (CIDSS).This aimed at a convergence of services, withcommunities being organized and mobilizedto take decisions, manage local funds andmonitor and evaluate the system. Originally,this only involved the poorest municipalities,but since 1997 it has included all municipali-ties regardless of income class. Since then theprogramme has had some success in meetingminimum basic needs of local communitiesthanks to increased community participa-tion.12

Community development in Indonesia. TheKecamatan (sub-district) DevelopmentProject covers 15,000 villages throughoutIndonesia. Every year, each village in thesub-district makes a proposal for small-scaleinfrastructure projects and the provision ofseed capital for microcredit cooperatives.Most villages propose an infrastructureproject plus a small amount for savings andloans for women. An inter-village forumranks all proposals according to a number ofcriteria, such as the number of beneficiariesand project cost, and projects are fundedaccording to the rank list until all funds havebeen exhausted. If the project is funded, ameeting is held to plan construction, afterwhich an elected implementation teamprocures materials, hires labour and carriesout the project. The members of the imple-mentation team receive an honorariumlimited to a maximum of 3 per cent of thetotal cost of the project. No contractors are


used in construction.13 This has limited thescope of collusion between officials andprivate agencies to the advantage of theintended beneficiaries.

Social audits in India. India’s National RuralEmployment Guarantee Act (NREGA),provides for 100 days of guaranteed employ-ment to one member of every rural household,based on the principle of self-selection byfocusing on unskilled, manual work. Thereare strong provisions for transparency andaccountability at all levels. For instance,wages are to be paid in the presence of thecommunity on pre-specified dates; all relevantdocuments are to be made available for publicscrutiny; and regular social audit of all workshas to be conducted, in tandem with India’sRight to Information Act. This seems to behaving an effect: corrupt officials are return-ing money they have taken from villagers andasking them not to complain to the socialaudit teams or at the public hearings.14

Community-based approaches are not,however, an answer on their own; there isalways the danger of communities being co-opted by the local elite. Every effort should,therefore, be made to mobilize the local

community through the media, using popularculture and folk traditions to explain topeople their rights and entitlements as wellas their roles and responsibilities in anyproject. This has to be an ongoing process. Tobe sustainable, community-driven approacheshave to be backed by a legal framework andstrong bureaucratic support.

Minimizing the LeaksMinimizing the LeaksMinimizing the LeaksMinimizing the LeaksMinimizing the Leaks

Any government programme that involves atransfer of resources to its poorest citizen hasto anticipate the danger that the funds,materials or food may disappear en route totheir intended destination. But there are waysto minimize the leakages. In the case of specialdevelopment situations this may often involvesetting more realistic standards, backed byeffective auditing as well as programmedesign and speed. These should be drivenmore by the needs of recipients and less bythose of donors or the glare of the inter-national media. Social safety nets too can bebetter designed to avoid corruption, thoughbecause these run over longer periods, theyoffer many more opportunities for commu-nity participation and monitoring.

Corrupt officials arereturning moneythey have taken

from villagers andasking them not to

complain to thesocial audit teams

or at the publichearings

The earth provides enough to satisfy everyman’s need, but not every man’s greed.MAHATMA GANDHI

CHAPTER 5: CLEANING UP NACLEANING UP NACLEANING UP NACLEANING UP NACLEANING UP NATURAL RESOURCESTURAL RESOURCESTURAL RESOURCESTURAL RESOURCESTURAL RESOURCES 9191919191


Cleaning Up Natural ResourCleaning Up Natural ResourCleaning Up Natural ResourCleaning Up Natural ResourCleaning Up Natural Resourcescescescesces 55555

commonly ignored by commercial fishingcompanies who bribe officials to turn a blindeye to transgressions.2 On a smaller scale,poor people will often have to pay bribes forpermits to use resources such as land, waterresources or forest products.

Fraud and embezzlement. Public officials may,for example, run their own ‘off-the-book’businesses using state-owned natural resourceassets.

Conflicts of interest and favouritism. Manypoliticians also have extensive investments in

Payments to ‘lookthe other way’ are

also evident incommercial fisheries

Millions of poor people rely on access tocommon-property natural resources – waterand land, fisheries, forests and wildlife –which are crucial to their income and canprovide safety nets in times of crisis. In India,for example, such resources are thought toprovide about 12 per cent of household incomeamong the poor.1 But these same resourcesare also of great interest – often for otherpurposes – to the rich and powerful who havelittle compunction in seizing them to establishlucrative businesses. Natural resources areprone to corruption for a number of reasonslike inadequate property rights, among thepoor, unequal power, remote locations, etc.(Box 5.1). Not surprisingly, the exploitationof natural resources is also cursed with many,often overlapping, forms of corruption –bribes, fraud and embezzlement conflicts ofinterest, favouritism, and state capture.

Bribery. Companies may bribe public officialsto facilitate legal acts, to get permits forcutting and transporting timber, alternatively,they may pay to get away with illegal acts suchas logging in protected areas. Payments to‘look the other way’ are also evident incommercial fisheries: to sustain the fishstocks on one of South-East Asia’s largestlakes, for example, there is a ban on fishingfrom August to October, though this is

Many developing countries in the Asia-Pacific region are rich in natural resources – vasttropical forests, extensive mineral deposits and fertile agricultural land. These assets shouldserve as a firm basis for economic and human development, but too often their potential isdrained away through corruption. Given the enormous potential profits, corruption too canbe on a grand scale, reaching the highest levels of the state, indeed frequently amounting to‘state capture’.

BOX 5.1WHAT MAKES NATURAL RESOURCES PARTICULARLY

PRONE TO CORRUPTION?

• Lack of property rights, particularly for poor people• Those who are most dependent on natural resources are the poor and

powerless who are also less able to resist corruption• Limited supply when the rate of use of renewable natural resources

exceeds the natural replacement rate• Remote locations make resources difficult to monitor• Excessive state discretion over natural resources in cases where the

state has a monopoly• Elsewhere, excessive private discretion over natural resources –

particularly in cases of state capture or in remote areas where thestate is weak

• Commodities are often traded through complex chains, includingsmuggling

• Lack of market prices for some natural resources – primarily theirecosystem aspects services – means that corrupt behaviour is low cost

Source: Feld et al. 2007.


political lobbying or by making donations topolitical parties. Given the nature of statecapture, in some cases it can be difficult todistinguish this from pure mismanagement ofnatural resources.

These different types of corruption cancreate complex and seemingly impenetrablewebs of influence (Table 5.1). It might betempting to envisage a simple linear model ofcorruption with dishonest public officials atone end and state-capture at the other. In fact,these options are usually interwoven withmany ambiguous networks or associationsbetween state officials, political elites andprivate businessmen. One report on themining industry in Mongolia found thatpolitical elites not only demanded kickbacksfrom mining companies but also entered intonumerous deals and joint ventures withthem: ‘the line between public and privatespheres is almost non-existent.’4

Similarly, complex relationships canoccur at lower levels, indeed they may bedeeply embedded in social structures. Onereport on a small community living next to awildlife sanctuary in India found that local

the companies whose activities they aresupposed to be regulating, or they can awardconcessions or favours to family members orpolitical allies. Public officials also often blurthe lines between their official responsibilitiesand their private interests. Many can be seenas using the ‘revolving door’, moving back andforth between public office and privatecompanies, exploiting their period in agovernment department for the benefit oftheir future employers. An official in aforestry department, for instance, maysupport pro-timber policies and then join theboard of directors of a major timber company.

State capture. In the extraction of naturalresources, this is one of the most serious andpervasive forms of corruption, as privatecompanies pay public officials to shape laws,policies and regulations to their advantage.This has been an issue in the Pacific Islandswhere international logging companies havebeen accused of trying to influence policydecisions by bribing members of govern-ments.3 State capture can, however, also beachieved through legal routes – by intense

TABLE 5.1SOME FORMS OF CORRUPTION IN NATURAL RESOURCES

Land Fisheries Water resources Wildlife Forestry Minerals

Grand Bribes for major Bribes for access Deliberate non- Bribes for large Bribes for Bribes and kick-corruption land transfers to major fisheries investment in scale illegal trade forestry backs for mining

Nepotism-based Nepotism-based water structure Nepotism-based concessions concessionsconcessions concessions maintenance and concessions Nepotism-based Nepotism-based

kickbacks for concessions concessionslarger-scale watersystemsNepotism-basedconcessions

Petty Bribes for land Bribes for small- Bribes for water Bribes for small- Bribes for forest Bribes forcorruption transactions scale fishery access scale trade permits artisinal mining

access

State capture Interference in Interference in Interference in Interference in Interference in Interference inland regulations fishery regula- public water wildlife regula- forestry regula- mining regula-

tions investments tions tions tions

Source: Steel et al. 2007.


Even when theownership is clear,

land may still betaken by force

people who wanted access to forest resourceswere bribing lower-level forest officers whoduly passed a share upwards through theForest Department bureaucracy. Forestofficers loyal to ‘the system’ could expectpromotion; others would usually betransferred. For both the bribers and thebribed, the system had developed into a typeof ‘protocol’ for the use of the forest. Thissystem generally excluded the pooresthouseholds who could not afford to pay andalso marginalized women who had fewerchances to establish ‘closeness’ to the forestofficers by eating or drinking with them.5

The Extent of CorruptionThe Extent of CorruptionThe Extent of CorruptionThe Extent of CorruptionThe Extent of Corruption

State and private elite groups – often in collu-sion – are thus in a position to monopolizeaccess to resources and exclude the poor. Asa result, a small elite often accrue the benefitsfrom natural resources – doing little topromote broad-based economic development– or lift people out of poverty. This is evidentacross most important natural resourcesectors from land to water to minerals.

LandLandLandLandLand

For the majority of poor people in Asia andthe Pacific, land is a key resource in both ruraland urban areas. In rural areas, the poorestdo not own the land they live or farm on; theyusually rent or share-crop or work as hiredlabour on the land of others. Even if they doown land, it will typically be the mostmarginal. In the urban areas, they often livein illegal settlements with little access towater, electricity and other urban services.

Corruption related to land is oftenconcerned with administration. In manycountries there are few systematic records ormaps, while legislation and registrationsystems are frequently inadequate. The situa-tion is further complicated when customary

law recognizes access to land based onkinship. This may respect the rights oftraditional groups but can also createopportunities for nepotism, favouritism, andclientelism. A 2002 Transparency Interna-tional survey conducted in five countries inSouth Asia – Bangladesh, India, Nepal,Pakistan, and Sri Lanka – found landadministration to be one of the three mainsectors prone to corruption.6 Similarly, astudy from the Pacific also identified landadministration as one of the areas mostvulnerable to corruption.7 In Bangladesh, 97per cent of households were found to havepaid bribes for land registration, 88 per centfor land mutation, 85 per cent to obtain land-related documents, 83 per cent for landsurveys and 40 per cent to receive land.8

In addition to smaller-scale corruptionrelated to registration, there can also be muchlarger scale corruption related to land grabs.A number of countries in South-East Asia, forinstance, have seen the land of poor andindigenous communities seized for govern-ment or private developments. Uncertaintiesin land ownership can compound thesituation. Even when the ownership is clear,land may still be taken by force.9 A recentlyapproved law on anti-corruption in Viet Nam,which aims to heighten the responsibility ofthe heads of land management bodies andauthorities at all levels in curbing corruption,may have a positive impact in this regard.

In Cambodia, corruption and lack oftransparency connected with rising economicand military appropriation of communallands have exacerbated land disputes andskewed land ownership patterns to thedisadvantage of both rural and urban poor.The problem is difficult to address due to theabsence of land records and maps, inadequatelaws and land registration systems and theinability of the justice system to deal withland disputes.10


WWWWWater Resourater Resourater Resourater Resourater Resourcescescescesces

For the two and a half billion people living inlow-income countries, agriculture is the mostimportant sector by employment and by farthe largest user of water.11 Access to water isclosely linked to land values and livelihoodpotential. Both surface and groundwater areimportant; for example, over half the popu-lation of Bangladesh, India and Pakistanhas a livelihood-stake in groundwaterirrigation.12

Corruption often distorts the provision ofwater infrastructure and influences decisionson who should benefit from water flows. Thisinvariably works against the poor who areless able to exert political pressure or paybribes. In some South Asian countries likePakistan, irrigation officials routinely requirebribes to ensure continuous supplies ofwater.13 Corruption is also a major factor inshaping policy, steering investment away fromefforts to improve the efficiency of existingwater provision, which offers fewer opportu-nities for kickbacks, and towards the morelucrative construction of dams and largeirrigation schemes.14

‘In South Asia irrigation charges aretypically very low by comparison with thosein East Asia, both in absolute terms and asshare of the value of production.’15 Lowcharges are justified for sustaining foodsecurity and poverty reduction but hide equityproblems since poor farmers tend to pay morefor irrigation water than larger landowners.Unequal access and unreliability of irrigationschemes maximize the opportunities forcorruption in South Asia. Although irrigationcharges are higher in China and Viet Nam,water is more equitably and reliablydistributed across the system, enabling poorproducers to finance payments throughhigher productivity.16

FisheriesFisheriesFisheriesFisheriesFisheries

Fishing is an important source of income toisland and coastal developing countries. Asia-Pacific accounts for 49 per cent of globalcapture fisheries production,17 and fisheriescontribute significantly to GDP in many low-income countries. In Bangladesh, fisheriesprovide over 5 per cent of the GDP and fulltime employment for more than 2 millionpeople.18

Illegal, unreported and unregulatedfishing is a serious global problem,particularly to some of the poorest parts ofthe world. This represents not just a majorloss of revenue, but is also threatening foodsecurity; fish stocks in many coastal areas ofthe region are being severely threatened byoverfishing. The main causes are institutionalweaknesses and lack of capacity. Manycountries in the region prohibit the use ofdynamite or cyanide for fishing, but thesemethods persist and there are few arrests,with even fewer prosecutions.19 In parts ofSouth-East Asia, for example in Indonesia,the live fish trade could benefit many morefishing communities in the long term butinstead is organized to ensure short-termgains for officials and entrepreneurs at theexpense of fragile coral reef ecosystems andthe local communities that depend on them.20

ForestryForestryForestryForestryForestry

Forest products contribute to an average of10 per cent of the GDP in some of the world’spoorest countries.21 While the forest area hasincreased slightly in industrial countries since1980, it has declined by almost 10 per cent indeveloping countries.22 Deforestation is alsocausing massive loss of biodiversity, floodingand soil erosion while exacerbating globalclimate change.

Corruption oftendistorts theprovision of waterinfrastructure andinfluences decisionson who shouldbenefit from waterflows


South-East Asia isresponsible for one

quarter of theglobal trade inillegal wildlife

The global timber trade is plagued by highrates of illegal logging (Table 5.2) which ofteninvolves corrupt activities and can be used asa proxy for the incidence of corruption. Withsome species of timber reaching $500 percubic metre logging is a lucrative business. Itinvolves extensive networks of corruptofficials within police forces, customsagencies and military forces – all colludingwith powerful national and internationalsyndicates. Corruption emerges at each linkin the chain – from issuing permits andlicenses for wood harvesting to inspecting andexporting the products. Governments in theregion, such as Cambodia’s acknowledge thescale of corruption and illegal plunder butillegal activity has not been adequatelyaddressed23 and anti-corruption activists stillface intimidation.24 Similarly, the IndonesianGovernment is active in fighting illegal loggingand has worked with a series of internationalprogrammes and initiatives.25 However, theseefforts are partly being undermined by theactivities of neighbouring countries.26

In Indonesia, less than one-fourth of thetotal logging operations, estimated at $6.6billion, is legal. The value added of illegal logexports represented 3 per cent of Indonesia’sGDP in 2000, or 17 per cent of the valueadded of the agricultural sector output. Thegovernment also loses considerable revenue,because almost no taxes are collected on illegallogging. Informal payments and bribes in thissector are estimated to be more than $1billion a year.27

During the 1980s and 1990s, unregu-lated logging to meet the demand in Pakistan’smarkets is thought to have destroyed overhalf of Afghanistan’s natural forests. TheUnited Nations Environment Programmereports that the situation in the past few yearshas spiralled out of control, with 25 to50 trucks containing illegal logs crossingthe border every day.28 The Pakistan

Administrative Staff College in Lahorereports, ‘it is alleged that an association ofpowerful businessmen have formed some-thing akin to a “timber mafia” with represen-tation across government offices and stateinstitutions.’29

The corrosive effects of illegal logging arenot only confined to the forest sector. Forestproducts are bulky, making illegal lumbervisible and easy to be intercepted by officials.In order for forestry corruption to thrive, arange of people including customs, police,local politicians and transport authoritiesneed to collude, and as a result all theseinstitutions lose their integrity.30

WildlifeWildlifeWildlifeWildlifeWildlife

Wildlife is a vital issue for poor people.Around 13 per cent of people living on lessthan a $1 a day are thought to rely on wildlifeas a source of livelihood.31 South-East Asia isresponsible for one quarter of the global tradein illegal wildlife,32 thought to be wortharound $15 billion per year, or nearly $160billion with the inclusion of wild-sourcedtimber and fish products.33 The problem isparticularly acute in Asia, which hosts nineof the ten most endangered species. Much ofthe illegal trade is fuelled by the demand for

TABLE 5.2SOUTH-EAST ASIA, INDICATIVE ESTIMATES

OF ILLEGAL LOGGING

Country (various years) Proportion of illegal logging (%)

Cambodia 90Indonesia 70–80Lao PDR 45Malaysia Up to 35Myanmar 50Papua New Guinea 70Thailand 40Viet Nam 20–40

Source: World Bank, 2006e.


The mining of oil,gas and hard rockminerals is alsosusceptible to large-scale corruption

of bribes when conducting business overseas– often after their own natural resources havebeen exhausted.38 Malaysia’s forests weredepleted years ago but the country is still oneof Asia’s top exporters of timber thanks tosupplies from Indonesia.39 This exportconsists of both legally and illegally harvestedtimber, but once a log has changed hands it isvery difficult to identify its source. FollowingChina’s total logging ban in 1998, timbercompanies looked overseas to Cambodia,Indonesia, Lao PDR, Myanmar, Papua NewGuinea and West Africa. One report on thesmuggling of illegal wood from Myanmar toChina by ethnic Kachin people found that$125 per truck was paid to Burmese soldiers,$83 to the forestry department and $25 tothe drug police. Then at the final stop beforethe border, the Kachin group collected a ‘tax’from Chinese truckers before issuingdocuments that declared the shipments to belegitimate.40

In Lao PDR illegal logging and relatedcross-border trade is possible because of thecollusion between importers, customsofficers, the military and local party officials.‘Much of the border trade is conductedinformally and illegally, largely in response tocustoms officials’ demands for illicitpayments.’41 Quantities of goods are systema-tically under-reported, with the savings intariffs shared between the importer and localparty officials. Attempts to give moreresponsibility to the provinces for managingtheir revenues only aggravated the problem.42

The final consumers must also takeresponsibility. According to a 2005 reportcommissioned by the Australian Government,around AUS $400 million-worth of illegallylogged timber products are imported intoAustralia every year.43 It is very difficult toactually trace the origin of a log once it is beingprocessed, and major retailers in Europe andNorth America are selling furniture produced

traditional medicines. In 2003 one raid by thelocal police in Chatuchak market in Bangkokseized protected species worth $1.25million.34 In Mongolia it is thought that theillegal and often corrupt trade in fur seriouslyendangers the population of protectedspecies.35

MineralsMineralsMineralsMineralsMinerals

Corruption affects the trade of manyminerals across the region – from sand tometals, and oil to gas. The mining of sand isan environmentally damaging but highlylucrative operation; even in countries whereit is governed by permits. In Sri Lanka muchof this takes place illegally with policeinvolvement or the use of permits procuredthrough bribery.36 The mining of oil, gas andhard rock minerals is also susceptible to large-scale corruption which among other thingsleads to environmental destruction; minesand exploration sites are usually in remotelocations where governance structures oftenare weakest. The problems are compoundedwhen political elites have personal stakes inmining ventures.37 This is an issue incountries with mineral and oil deposits suchas precious metals in Mongolia, phosphateand other minerals in Nauru and thePhilippines. It also applies to oil, coal and gasindustries that are established in Bangladesh,Indonesia and Pakistan, which are now beingdeveloped in Cambodia and Myanmar.

The Cross-Border DimensionThe Cross-Border DimensionThe Cross-Border DimensionThe Cross-Border DimensionThe Cross-Border Dimension

Since many of the natural resources being exploit-ed are destined for export, corruption in thenatural resources sector generally seeps acrossnational borders. Transparency International’sbribe payers index finds that companies fromChina, India, Malaysia, Russia and Taiwan,Province of China frequently pay high levels


in Asia to customers with little inkling of thewood’s origin.44 Nevertheless, the impact ofinformed consumers and consumer drivendemand for fairly and sustainably managedresources should not be underestimated.Partly due to the ‘fair trade’ movement, thereis an increasing trend among consumers indeveloped countries to question the origin ofproducts as well as the ethical records of thecompanies behind.

The Impact on the PoorestThe Impact on the PoorestThe Impact on the PoorestThe Impact on the PoorestThe Impact on the Poorest

While corruption in the management ofnatural resources creates significant obstaclesfor many aspects of national development, itis particularly damaging for the poorestcommunities:

Loss of land. Many farmers have been driveninto poverty as a result of land expropriationsthat have been expedited through corruption.In countries where land is owned collectivelyofficials may illegally approve the conversionof farmland for construction or mining.45

This jeopardizes local food security, and maydrive a mass of small farmers and peasantsinto poverty. The farmers who lose their landgenerally get little or no compensation becausethey have limited legal rights. Land culti-vated, either by the state or by villagecooperatives leaves individual farmers withlittle recourse in the case of expropriation.Farmers can also lose their land following thebreakdown of traditional systems of regula-tion on the use of common property. This maybe due to population pressures but can alsooccur when public resources are leased out tocommercial operators through agreementsthat grant exclusive access. Corruption inland administration is not limited to countrieswhere land is collectively owned. In countrieslike India, for instance, private land can belegally acquired by the state for public

purposes based on the Land Acquisition Act,but corruption sometimes takes place in landvaluation, which can harm poor farmers.

Loss of water rights. The poor can also bedeprived of rights to water. In Pakistan,wealthier farmers often pay bribes to gainaccess to irrigation water as well as to ensureinvestments in new irrigation systems thatbenefit their land. This has been documentedas far back as the 1980s.46

Overharvesting. Corruption is accelerating theexhaustion of many natural resources, not-ably primary forests and inshore fishinggrounds on which many communities relyupon for their livelihoods. Deforestation andland use change is currently the source ofabout 20 per cent of the world’s greenhousegas emissions. The 2007/2008 Global HumanDevelopment Report identifies reducingdeforestation as one of the main priorities toensure that CO2 emissions can be sufficientlymitigated. In today’s world the real climatechange vulnerabilities linked to storms andfloods are in poor rural communities such asin the great river deltas of the Ganges and theMekong, as well as in sprawling urban slums.47

Mismanagement of resources. Corrupt officialswho see opportunities for gain will generallyresist or subvert reforms that might threatentheir incomes, perpetuating inefficient waysof managing resources. In India the dominantmodel of irrigation infrastructure provisionhas aptly been described as ‘build-neglect-rebuild’ since maintenance is not a profitablebusiness, but rehabilitation and new irriga-tion construction are.48 Meanwhile systemscontrolled by corrupt engineers or managerstypically exclude the poor who cannot affordbribes and also operate at very low levels ofefficiency, reducing agricultural output andincomes.

Major retailers inEurope and North

America are sellingfurniture produced

in Asia tocustomers with

little inkling of thewood’s origin


People who live inareas where miningand other industrialwastes are illegallydumped into riversface serious healththreats from theeffects of toxicchemicals

Subjugation of indigenous peoples. In manycountries indigenous groups have tradi-tionally occupied land that is now beingexploited by commercial interests in collusionwith governments. As a result, they are beingdenied rights to self-determination whichwould require that they regain their land orresources or receive compensation. This instark contrast to Article 26 of the Declarationon the Rights of Indigenous People adoptedby the General Assembly in 2007, whichrecognizes indigenous peoples’ inalienablecollective right to the ownership, develop-ment, use and control of lands, territoriesand resources.

Threats to health. People who live in areaswhere mining and other industrial wastes areillegally dumped into rivers face serioushealth threats from the effects of toxicchemicals. In Myanmar, gold-mining enter-prises not only pay taxes to the Governmentbut also follow a well-structured system ofpersonal payments to officials who canprotect them from any repercussions for con-taminating the environment with mercury.49

Loss of public revenue. Poor people usually havea greater need for government services whosebudget allocations are severely constrained bylosses from corruption. The Government ofIndonesia has estimated that lost forestrevenue costs the nation up to $4 billion ayear or around five times the annual budgetfor the Department of Health.50 Viewed innarrow commercial terms, deforestation onlymakes sense because markets currently attachno value to carbon repositories. Also, thoseprofiting from overharvesting of forests oftenbelong to powerful elites with little motiva-tion to change the existing market structures.In Indonesia, for example, the market returnof commercial logging represents less thanone-tenth of the value of the carbon bank itsforests constitute. This means that people

‘depending on forests for their livelihoods arelosing out to economic activities operating onthe basis of a false economy’.51 However,while corruption is linked to loss of revenuederiving from the exploitation of forestsproducts, we do not know the magnitude ofthe loss caused by corruption.

Sustaining authoritarian regimes. People,especially the poor often suffer whenauthoritarian and highly corrupt governmentsgather wealth from the exploitation ofresources. The Cambodian Khmer Rouge, forexample, is thought to have received between$220 and $390 million a year from the saleof timber.52

Uprooting Corruption inUprooting Corruption inUprooting Corruption inUprooting Corruption inUprooting Corruption inNatural ResourcesNatural ResourcesNatural ResourcesNatural ResourcesNatural Resources

Combating corruption in natural resourceswill rely on many of the same measures thatcan deal with corruption in general – greateropenness, strengthening government institu-tions, improving enforcement and havingmedia and civil society watchdogs ensuregreater accountability. Given the highlycross-border nature of the problem, inaddition to national remedies, internationalcooperation needs to be stressed. Overall theaim should be to empower citizens to havegreater control over decision-making, whilerestricting the hidden power of corporations,concentrating less on efforts to improve effi-ciency or attract foreign investment and moreon ensuring that policy making is not capturedby the wealthy for their own self-interest.Experience across the region suggests anumber of steps that can combat corruption:

Empower Poor People inEmpower Poor People inEmpower Poor People inEmpower Poor People inEmpower Poor People inNatural ResourNatural ResourNatural ResourNatural ResourNatural Resource Managce Managce Managce Managce Managementementementementement

In some cases problems have been solved bydecentralizing natural resource management.


On a number ofoccasions the poor

themselves havetaken direct action

to resist naturalresource corruption

Thailand, for example, used to have a top-down system for forestry but is now taking amore participatory approach. The PhupanNational Park, previously under themanagement of the Community ForestryDivision of the RFD, was a site of constantconflict but is now managed by Udon ThaniForestry Region Office which works moreclosely with indigenous rights holders.53

Similarly, in India, a system of ‘joint forestmanagement’ which started in West Bengal,has enabled villagers to reap the benefits ofthe forests they help manage. It alsoencourages more transparency in themanagement of forests, which has not beenexempt from corruption. By 2002, co-management of forests was underway in 27states, covering 18 per cent of the totalforested area and involving more than 62,000forest protection committees. In AndhraPradesh alone these include 1.2 million,mostly tribal people. Nevertheless, manychallenges remain particularly on themarketing side since many forestry productsare still marketed through uncompetitivechannels that reduce the profits received bylow-income household producers.54

Joint management can be more difficultin the case of extractive industries. This isdue to the economics of large-scale extractionplus the activities of companies that aretypically bound with complex laws andregulations. Even so, NGOs, CSOs and otherscan help local people master complexities andconduct training sessions along with publichearings to review laws, policies and licencesfrom a rights-based angle. There may also beopportunities for local communities to workwith companies to make ‘integrity pacts’, asin the Philippines’ mining industry wheresuch pacts grant companies the right tooperate subject to binding commitments touphold human rights and comply with

environmental standards. Multi stakeholderinitiatives to improve accountability byequipping citizens, media and privatecompanies can also be of help (Box 5.2).

Resistance by Poor PeopleResistance by Poor PeopleResistance by Poor PeopleResistance by Poor PeopleResistance by Poor People

On a number of occasions the poor themselveshave taken direct action to resist naturalresource corruption that denies them accessto land, fisheries and forests. Early in 2007,for example, tribal fishers in 44 hamletsprotested outside the office of the SatpuraNational Park (a tiger sanctuary) against theMadhya Pradesh State Government’sdecision not to renew their fishing lease forthe man-made Tawa reservoir which fallswithin a protected area of the park, eventhough a Government task force on the issuehad endorsed their fishing rights. Somealleged that the Government’s decision torevoke the community’s fishing rights wasconnected to their involvement in exposinggovernment corruption.55

BOX 5.2REVENUE WATCH

Revenue Watch International (RWI) is a multi-stakeholder initiative thatworks with civil society, media and policy makers in resource-dependentcountries. The Institute works with key organizations such as the WorldBank, Columbia University, the Democracy Center, Global Witness, Savethe Children (UK), Transparency International and Oxfam.

The mission of RWI is to improve democratic accountability in naturalresource-rich countries by equipping citizens and the media with theinformation, training, networks and funding they need to become moreeffective monitors of government revenues and expenditures as well asby advising governments and policy makers on best practices in resourcerevenue management. This also works with companies to encourage andsupport an accountable and transparent presence in resource-richcountries.

RWI helped initiate and works closely with, the international PublishWhat You Pay campaign to encourage oil, gas and mining companies topublicly report payments to governments in resource-dependenteconomies and to engage the IFIs in the resource revenue transparencycampaign.

Source: www.revenuewatch.org


Improvements inmonitoring can be

achieved directly byusing new

technologies

Improve Environmental andImprove Environmental andImprove Environmental andImprove Environmental andImprove Environmental andSocial Impact AssessmentsSocial Impact AssessmentsSocial Impact AssessmentsSocial Impact AssessmentsSocial Impact Assessments

Communities will be in a better position tooffer free and informed consent for large-scaledevelopment projects in the extractiveindustries if they can rely on thoroughenvironmental and social impact assessments(ESIAs), followed by open public hearings onthe findings. Although ESIAs have beencarried out in some countries in the region,these have either not been implemented orhave been abused by the same, powerfulinterests that are the source of many of theproblems. Such assessments are usuallyconducted by specialized consulting firms thatrely on resource extraction companies fortheir income and in some cases theconclusions seem suspiciously favourable totheir clients. There are however, exampleswhere assessments have been conducted in ameaningful and unbiased manner, with thefull involvement of local people and civilsociety organizations. Even when imperfect,ESIAs may be the best way to limit statecapture.

Increase the Supply ofIncrease the Supply ofIncrease the Supply ofIncrease the Supply ofIncrease the Supply ofNatural ResourcesNatural ResourcesNatural ResourcesNatural ResourcesNatural Resources

Corruption is often driven by scarcity; this isclearly demonstrated in natural resourceswhich may be limited by their naturalavailability. Scarce resources such as wildlife,water, fish and minerals may generate highprices or demand that opens the way forbribes and kickbacks. One way of limiting theopportunities for corruption in naturalresources is to expand the supply – byplanting forests, establishing fish farms orharvesting rainwater for irrigation. It hasbeen estimated that plantation forestsmanaged exclusively for wood and fibre onjust 4 per cent of existing forest lands could

meet 50 per cent to 60 per cent of worldforestry demand by 2050.56 With plungingnatural fish stocks, fish farms alreadyprovide a major portion of global output.However, replenishing natural resourcesneeds to be managed carefully, since plantedforests compete for land with natural forests.Similarly, fish farms could be avenues forincreased pollution into rivers if not managedproperly. In other words, expanding supplycan bring significant gains but it can also becontroversial and has to be carefully designedto protect the environment and avoidpenalizing the poor.

IncrIncrIncrIncrIncrease Monitoring and Tease Monitoring and Tease Monitoring and Tease Monitoring and Tease Monitoring and Transparransparransparransparransparencyencyencyencyency

Increased monitoring and transparency canresult from pressure on stakeholders bothfrom within and outside a country. Corruptexploitation of natural resources often takesplace in remote regions, far from officialconcern and public scrutiny, and precisely inthose areas inhabited by the poor.57 Improve-ments in monitoring can be achieved directlyby using new technologies. In Cambodia andIndonesia, for instance, remote sensing isbeing used to identify forest concessions thatwere awarded illegally. Monitoring andtransparency can also be promoted by the useof independent monitors, which is nowgaining ground in the forestry sector.

Alert Stockmarket InvestorsAlert Stockmarket InvestorsAlert Stockmarket InvestorsAlert Stockmarket InvestorsAlert Stockmarket Investors

Extraction processes are capital-intensive andoften involve large multinational companieswho can be susceptible to internationalpressure. Based on the recommendations ofthe Norwegian Government’s Council onEthics, the Norwegian Pension Fund – thelargest pension fund in the world – hasblacklisted 19 companies and subsequentlysold all stocks and shares in these businesses.


Negative publicity caused by corruption,human rights abuses and damage to theenvironment have also led private pensionfunds to question certain companies.58

Similarly, export credit agencies aredeveloping more robust guidelines to combatbribery among the companies they support.59

Put Pressure on Asian MultinationalsPut Pressure on Asian MultinationalsPut Pressure on Asian MultinationalsPut Pressure on Asian MultinationalsPut Pressure on Asian Multinationals

Many of the multinationals engaged incorrupt activities have their home base inAsia. So far, however, countries in the Asia-Pacific region have shown little interest inpolicing their companies abroad. Malaysianlogging companies are prominent in thetimber industry throughout Asia and thePacific. There is potential here for the Govern-ment to encourage these companies to committo a corruption-free environment in theiroperations abroad. The same recommen-dation can be levelled at other countries inthe region that have companies operatingoutside their national jurisdictions.

EnsurEnsurEnsurEnsurEnsure Fe Fe Fe Fe Financial Tinancial Tinancial Tinancial Tinancial Transparransparransparransparransparencyencyencyencyency

Companies involved in the extraction ofnatural resources would also be under morepressure to avoid corruption if all theirfinancial transactions were exposed to publicscrutiny. Based partly on the experience ofNorway and Alaska, there has been agrowing movement among internationalNGOs to put pressure on companies andgovernments to increase financial trans-parency. The NGO, Global Witness, heads aworldwide coalition of more than 190 civilsociety groups, which in 2002 launched acampaign called Publish What You Pay(PWYP) calling for not only greater trans-parency but also for protection for companiesthat decide to disclose their payments(Box 5.2).

Progress at an inter-governmental level isattributed to the Extractive IndustriesTransparency Initiative (EITI), alsosupported by the G8 summit in 2003. EITItook PWYP a step further by requiringfinancial disclosure by host governments. Sofar, 22 developing countries have signed up toEITI, although only two are from the Asia-Pacific region: Mongolia and Timor-Leste.Once a host government commits to the EITIall companies operating in its territory,including those that are state-owned, have tofollow a set of principles and publish infor-mation on payments. EITI implementation iscarried out with the active support andfinancial assistance of donor agencies, inter-national financial institutions, corporationsand civil society organizations.

Although transparency is important, it isonly one step along the way. The financialdeals can be immensely complex offeringcompanies, and governments numerous waysof concealing corruption. In many cases thedeals can only be fully understood inconjunction with contractual agreementswhich are often confidential. Even if the keyinformation is published, it can be difficult toextract evidence of state capture from floodsof extraneous data.

Balance Roles of the StateBalance Roles of the StateBalance Roles of the StateBalance Roles of the StateBalance Roles of the Stateand Private Sectorand Private Sectorand Private Sectorand Private Sectorand Private Sector

Corruption can be driven by failings of thestate. This can be tackled both positively byimproving state capacity and negatively bylimiting the powers of the state. The positiveresponse would take account of genericrequirements to improve the state such asimproved salaries, merit-based promotion,reduced politicization, better equipment andoperational budgets. There are also somespecific reforms that natural resource-basedagencies can undertake. This would include

Progress at aninter-governmentallevel is attributed

to the ExtractiveIndustries

TransparencyInitiative


Over 300companies inChina now holdFSC certificates

institutional reforms that separate produc-tion functions from monitoring and conserva-tion functions. In many countries in theregion, fishery and forestry departments areresponsible both for maximizing fish andforest production, as well as monitoring andconserving the resource base. Not surpris-ingly, this creates a conflict of interest andfertile ground for corruption. Other institu-tional reforms include rewards and incentivesfor corruption prevention. As illustrated inSri Lanka, a financial reward for detection ofanything illegal has been used to motivatecustoms officers to identify illegal exports ofornamental fish and other rare plants andanimals.

A negative response to state weaknessand potential corruption is to limit the waysthat the state can gain from corrupt naturalresource management. Many natural resourcerules allow significant state discretion whichcreates opportunities for corruption.

Discretionary powers of state officialscan be limited by simplifying the rules andmaking greater use of new technology. InKarnataka in India, land registry has been amajor source of corruption; village revenueofficials often monopolize the revenue recordswhich have frequently been tampered with.Now the Bhoomi programme has facilitatedthe computerization of the records and solimited the power of state officials to controlland transactions.60

The most extreme way to limit statediscretion is privatization, although the veryprocess of privatizing state assets can generatecorruption. In theory once a company is inthe private sector, it will be less prone to state-led corruption. In practice privatization maysometimes only shift the power from onecorruptor to another, increasing the power ofprivate companies and the conditions of statecapture. A first step is to ensure that openaccess to natural resources upon which the

poor depend are not privatized by elite groupsin a defacto way. Such unwanted privati-zation may occur when traditional systems ofregulation on common property use thatworked in the past have broken down, partlydue to population pressure combined withother factors. It can also happen when publicresources such as forests are leased out tocommercial-scale operators under concessionsagreements which grant exclusive access,driving out the poor. The central issue here isfor the government to establish a clear andtransparent regulatory framework forresource access rights, whether or not theyare publicly or privately held. In this regard,privatization may also have a positive impactas it can provide initiatives for managingresources appropriately and sustainably.

However, governments need to enforcelaws that prevent private-sector naturalresource corruption, imposing sufficientserious punishments to make corruptionmore costly than non-corrupt behaviour.Combating corruption will require judicialreform and the support of impartial,consistent criminal justice systems along withsuccessful prosecution of the guilty.Fortunately, this is an area that is receivingincreasing attention, though it is importantto recognize some of the specific obstacles tolitigation.

CertificationCertificationCertificationCertificationCertification

One encouraging trend among privatecompanies in the forestry and fishery sectoracross Asia has been the expansion ofschemes of certification. The ForestStewardship Council (FSC), for example,promotes a chain-of-custody and trackingsystem to ensure sustainable logging andtimber manufacture. Over 300 companies inChina now hold FSC certificates. In thefisheries sector, the Marine Stewardship


The East AsiaMinisterial

Conference onForest Law Enforce-

ment and Gover-nance, which took

place in 2001, couldplay a role in

promoting regionalcooperation in

regulating illegallogging

Council (MSC) is promoting a similarapproach to achieve sustainable fisheries.There are also more generic internationalcodes of conduct. The United Nations hasbeen promoting the Global Compact whichincludes anti-corruption principles. WhileAmnesty International, Human Rights Watchand other NGOs initially welcomed the GlobalCompact initiative, some now question itseffectiveness because the pact is voluntary, itsstandards are unclear and there is no processfor monitoring or enforcement.

TTTTTackling Crackling Crackling Crackling Crackling Cross-Border Naturaloss-Border Naturaloss-Border Naturaloss-Border Naturaloss-Border NaturalResource CorruptionResource CorruptionResource CorruptionResource CorruptionResource Corruption

Many natural resources in the region are beingdepleted by corrupt, cross-border trade.More wildlife, for instance, is being tradedillegally because an economic boom in themajor client, China, has driven up thedemand.61 Several South-East Asian coun-tries have emerged as willing sources ofsupply – particularly Cambodia, Indonesia,Lao PDR, Myanmar and Viet Nam – facili-tated by high levels of poverty, lack ofenvironmental awareness, institutionalizedcorruption, and the long and porous bordersbetween South-East Asian nations. Butprotected wildlife is not just being smuggledby the poor. This is a very profitable activityand has attracted syndicates of organizedcriminal groups operating from Malaysia,Singapore, South China, Thailand and VietNam, who are also involved in drugs, illegallogging and human trafficking.

One way to tackle these issues is toughercross-border controls and regional coopera-tion. Unfortunately, the main regional group-ings – ASEAN and SAARC – have donerelatively little to set regional standards forimproved governance of natural resources.The prospects appeared to improve at theThirteenth Meeting of the Conference of the

Parties to the Convention on InternationalTrade in Endangered Species of Wild Faunaand Flora (CITES) held in Bangkok in October2004. This is one of the few multilateralenvironmental agreements to which all tenASEAN member states are party.

At the meeting, ASEAN announced aninitiative to work together to address theregion’s rapidly growing illegal trade inCITES-protected species and ten ASEANcountries committed towards developing aRegional Action Plan for 2005–10. Subse-quently there has been little action, however,and attempts to limit the trade in wildlife andprotect the environment have largely failed.In any case, the announcement of a trans-boundary wildlife trade action plan betweenLao PDR and Viet Nam is a positive sign.62

China’s support for these efforts is criticalfor success on controlling and limitingthis trade.

The East Asia Ministerial Conference onForest Law Enforcement and Governance,which took place in 2001, could play a role inpromoting regional cooperation in regulatingillegal logging. The conference adopted theBali Declaration, whereby participatingcountries committed themselves to increasetheir efforts to regulate the forest sector andstrengthen bilateral, regional and multilateralcollaboration to address illegal logging andviolations of forest law. The conference setup a regional task force to advance theDeclaration’s objectives, and the followingdiscussions have led to bilateral agreementsbetween the UK and Indonesia as well asJapan and Indonesia to combat illegal loggingand the international trade in illegally loggedtimber.63 The 2007/2008 Global HumanDevelopment report also emphasizes the needfor strengthening international cooperation increating incentives for conservation andsustainable management of rainforests andbacks international finance transfer plans on


What is clear isthat this has to bea combination ofnational andinternational action

deforestation as advocated by among othersIndonesia and Malaysia.

Another case of regional cooperation onnatural resources is the Forum FisheriesAgency in the Pacific whose work includesattempts to limit corruption in one of theworld’s most valuable fisheries: the tunaindustry of the Pacific.

Supporting the EnvironmentSupporting the EnvironmentSupporting the EnvironmentSupporting the EnvironmentSupporting the Environment

Countries with weak systems of adminis-tration are inevitably vulnerable to corruptionbut the scale of loss is often greatest when itcomes to the use of natural resources. Farfrom the centres of government, many of the

logging and extractive industries can shapetheir own laws, with little respect for the poorcommunities whose land they are exploiting.Confronting this power, especially when it isbased on state capture, will always bedifficult. But it is possible. What is clear isthat this has to be a combination of nationaland international action. Most of the corruptactivity would be much less profitablewithout ready markets in richer countries foroil, metals or agricultural products. Moreeffective monitoring and control by govern-ment and local communities will thereforeneed to be matched by international campa-igns that reject goods produced by corruptand exploitative individuals and companies.

At a time when we are establishingparliamentary democracy in the country . . .it is imperative to establish the Office ofthe Anti-Corruption Commission.HIS MAJESTY KING JIGME SINGYE WANGCHUK, FOURTH KING OF BHUTAN

CHAPTER 6: CRUSHING CORRUPTION FROM THE TOPCRUSHING CORRUPTION FROM THE TOPCRUSHING CORRUPTION FROM THE TOPCRUSHING CORRUPTION FROM THE TOPCRUSHING CORRUPTION FROM THE TOP 107107107107107

One of the most encouraging developments inthe Asia-Pacific region has been the emergenceof corruption as a major concern for nationalgovernments. On his election in 2004, thePresident of Indonesia said, ‘The eradicationof corruption will be my priority over the nextfive years. We have to eradicate it structu-rally and culturally . . . This country will bedestroyed if we do not stop the growth ofcorruption. There needs to be some shocktherapy so that the people know that thisgovernment is serious about corruption.’1

India too has been showing increasingdetermination. Addressing a conference aboutrural roads in mid 2007, the Prime Ministersaid that corruption on construction projectshad ‘spread like cancer to every corner of ourvast country’ and was a major reason for poorquality roads. Addressing a Confederation ofIndian Industry, he announced, ‘The cancerof corruption is eating into the vitals of ourbody politic,’ adding that ‘corruption need notbe the grease that oils the wheels of progress.’2

The challenge posed by corruption is alsoacknowledged in Bhutan. In the Preface to the2007 Annual Report of the Anti-CorruptionCommission, His Majesty, the 5th DrukGyalpo said, ‘The rise in corruption inBhutan is a challenge we face. How big thechallenge is will depend on how soon and howstrongly we decide to oppose it. There is noroom for corruption – it is as simple as that,not now and not in the future.’3

If countries are to tackle corruption, they will need to address the issue at all levels ofgovernment as well as in the private sector – reforming institutions and processes to reduceopportunities for corruption while creating effective systems for detecting malpractice andpunishing offenders.


Crushing Corruption frCrushing Corruption frCrushing Corruption frCrushing Corruption frCrushing Corruption from the Tom the Tom the Tom the Tom the Topopopopop 66666

A government determined to fight corrup-tion must not only enact legislation, promotecivic values and establish institutions andagencies. It must also demonstrate formalpolitical commitment to implement legislationcomprehensively, impartially and sustainably.

However, corruption is not just an issuefor the public sector. Much of the responsibi-lities rest with domestic firms, transnationalcorporations, banks and external develop-ment partners. Up to one-third of firms arethought to pay bribes for public procurementcontracts in emerging economies.4 In additionmany businesses are imposing undue influ-ence on national laws and institutions.

The UN Convention Against Corruptionrecognizes, that this is not simply a domesticissue. Corruption is a complex phenomenoninvolving many actors – givers, takers, legalfacilitators, regulators – who can reside any-where in the world. Effective action againstcorruption will therefore require extensivecross-border collaboration to controltransnational businesses, address moneylaundering and prosecute corrupt leaders andofficials who hide illegitimate fortunes inoverseas banks.

National Legislation andNational Legislation andNational Legislation andNational Legislation andNational Legislation andAnti-Corruption AgAnti-Corruption AgAnti-Corruption AgAnti-Corruption AgAnti-Corruption Agenciesenciesenciesenciesencies

One of the most basic anti-corruptionmeasures is to ensure that various corrupt

The UN ConventionAgainst Corruption

recognizes that thisis not simply adomestic issue


Legislation cancover issues suchas moneylaundering, publicprocurement andethical codes. Inaddition, manycountries in theregion haveestablished parlia-mentary committeeson corruption

the Hong Kong/Singapore-type single anti-corruption agency. Despite the limitednumber of success stories, policymakers anddevelopment agencies continue to investscarce resources in agencies that have doubt-ful impacts, often operating in a politicalenvironment that shows little commitment totackle the root causes of the problem.

According to the UNCAC, State Parties tothe Convention have the option to choosewhether to grant responsibilities to a singleorganization or to divide responsibilities bet-ween various prevention and law enforcementinstitutions. The single-agency approachplaces a number of key capabilities, responsi-bilities, and resources under one roof, thuscreating a powerful centralized agency (ICACstyle) to lead the anti-corruption drive. Themultiple-agency approach aims to combine theefforts of various units or agencies withspecific anti-corruption responsibilities thatmay be scattered among departments.

The first Asia-Pacific country to establishan independent ACA was Singapore which inOctober 1952 set up the Corrupt PracticesInvestigation Bureau (CPIB).7 The mostrecent cases were in Bhutan, which in 2006established the Office of the Anti-CorruptionCommission and Mongolia which formed theIndependent Authority Against Corruptionthe same year (Table 6.1). Some countrieswith notable ACAs include:

Singapore. To curb corruption during thecolonial period, the British relied on theSingapore Police Force. This was a seriousmistake, not least because of the prevalenceof corruption within the police. In 1952 there-fore the Government created the CorruptPractices Investigation Bureau, giving it threemain functions: to receive and investigatecomplaints; to investigate misconduct bypublic officers; and to examine public serviceprocedures so as to minimize opportunities

acts are outlawed – either as part of generallegislation, or as laws against specific formsof corruption. Legislation can also coverissues such as money laundering, public pro-curement and ethical codes. Of the 28 coun-tries in the region that responded to a surveyfor this Report,5 22 countries report specificlegislation on corruption. In addition, over thepast five years many countries in the regionhave established parliamentary committeeson corruption.

It is also important to protect ‘whistle-blowers’ – individuals who disclose informa-tion about wrongdoing. The survey shows 11countries offer some protection to whistle-blowers though this may not be very strong.Of the countries in the region that were not apart of the survey, Hong Kong (SAR), China,Republic of Korea,6 Australia, Japan and NewZealand have enacted laws or programmes forwhistle-blower protection.

Anti-Corruption AgAnti-Corruption AgAnti-Corruption AgAnti-Corruption AgAnti-Corruption Agenciesenciesenciesenciesencies

The results of the survey show that all 28 coun-tries have established formal anti-corruptionagencies (ACAs). These have taken variousforms. In some cases, as in Singapore, the agencyspecializes in investigation. Elsewhere, theACAs have broader functions, as in Hong Kong(SAR), China where the agency is also taskedwith prevention and communications. ACAscan also vary in legal structure. While in somecountries they have been established as auto-nomous agencies, in others with parliamentarysystems, they can take the form of commis-sions that report to parliamentary committees.And rather than having just one organizationthere may actually be a cluster of them.

While institutional responses vary acrossthe globe, and there is agreement that goodpractices are context specific, there has beenan increasing tendency, over the years, tocontinue to promote the establishment of


and the NBI was renamed the Anti-Corruption Agency. The Anti-Corruption Actof 1997 amalgamated previous legislation andprovided for new offences and additional

for corrupt practices. In addition, the agencyscreens candidates for positions in theSingapore Civil Service and statutory boards.8

Hong Kong (SAR), China. The story was simi-lar in Hong Kong (SAR), China where exten-sive police corruption led to the establishmentin 1974 of a specialist Independent Commis-sion Against Corruption (ICAC). Unlike theCPIB’s investigative model, Hong Kong’s(SAR), China. ICAC has been described as the‘universal model’ because its strategy is three-pronged, focusing on investigation, commu-nity relations and prevention. Overall it aimsto create ‘a new public consciousness’.9

India. The country has two ACAs; theCentral Bureau of Investigation (CBI) estab-lished in April 1963, and the Central Vigi-lance Commission (CVC) formed in February1964. The former was initially set up as partof the Ministry of Home Affairs but latertransferred to the Department of Personnelin the Cabinet Secretariat. As a police agencyof the central government it cannot investi-gate corruption offences in the states withoutthe consent of the state concerned. UnlikeSingapore’s CPIB and Hong Kong’s ICAC, theCBI is not independent of the police and doesnot focus entirely on corruption. Indeed, as apolice agency, the CBI has three major areasof operation: anti-corruption in the publicsector; economic crimes; and special crimes includ-ing organized crime and terrorism.10 The CVC,on the other hand, is free of control from anyexecutive authority. It is considered the mainanti-corruption agency in India, monitoringand advising central government agencies.However, it plays a mainly supervisory role.11

Malaysia. A series of anti-corruption effortsled in 1973 to the creation of the NationalBureau of Investigation (NBI). In May 1982,the Anti-Corruption Agency Act was passed

TABLE 6.1MAIN ANTI-CORRUPTION AGENCIES IN

ASIA-PACIFIC COUNTRIES

Anti-corruption agency Date established

Singapore Corrupt Practices Investigation October 1952Bureau

India Central Bureau of Investigation April 1963Central Vigilance Commission February 1964

Malaysia Anti-Corruption Agency October 1967

Hong Kong (SAR), Independent Commission Against February 1974China Corruption

Papua New Guinea Ombudsman Commission September 1975

Philippines Tanodbayan (Ombudsman) July 1979

Brunei Darussalam Anti-Corruption Bureau February 1982

Australia New South Wales Independent March 1989Commission Against Commission

Nepal Commission for the Investigation 1990of Abuse of Authority

Maldives Anti-Corruption Board 1991

Sri Lanka Commission to Investigate November 1994Allegations of Bribery orCorruption

Pakistan National Accountability Bureau November 1999

Thailand National Counter Corruption November 1999*Commission

Macao (SAR), China Commission Against Corruption December 1999

Republic of Korea Korea Independent Commission January 2002Against Corruption

Indonesia Corruption Eradication December 2003Commission

Bangladesh Anti-Corruption Commission August 2004

Afghanistan General Independent Adminis- 2004tration Against Corruption

Bhutan Office of the Anti-Corruption January 2006Commission

Mongolia Independent Authority Against December 2006Corruption (IAAC)

Note: * In Thailand, the 1997 constitution mandated the Government torestructure the 1972 predecessor ‘Commissions for Prevention andCounter Corruption in Civil Service’ into the NCCC with a new struc-ture and authority.

Source: Based on Quah 2007a.


One of the firstissues is where theACA is located ingovernment

powers for the Public Prosecutor and theACA.12 The three functions of the ACA are:detection and investigation; communicationand education of the population; andmonitoring and consultative services topublic agencies and the population.13

Papua New Guinea. When Papua New Guineaattained its independence in 1975, theConstitution provided the legal basis for theOmbudsman Commission (OC) – an indepen-dent agency with funding from the nationalbudget. The OC’s function is to guard againstthe abuse of power by public officials, helpingthem to do their jobs efficiently, while impos-ing accountability.14 To deal with maladmi-nistration, the OC investigates many publicagencies, responds to complaints, makesreferrals, questions decisions and considersdefects in the law.15

Philippines. In July 1979 a Presidential decreeestablished the Tanodbayan, or Office of theOmbudsman, though this proved ineffectiveand in 1998 had to be ‘rejuvenated’.16 Othergovernment agencies are also concerned withanti-corruption work, but the Tanodbayan isthe main ACA. Its functions include investi-gation, prosecution, and disciplinary controlover all elective and appointed officials,except for members of the Congress, the judi-ciary and impeachable officials. It also takesresponsibility for prevention by analysinganti-corruption measures and increasingpublic awareness and cooperation, whilerequiring officials and employees to giveassistance to the public.17

Nepal. The Commission for the Investigationof Abuse of Authority (CIAA) was establishedin 1990. It has five commissioners, appointedfor six years by the King on the advice of theConstitutional Council. To ensure theirindependence, they can only be removed by

impeachment by a two-thirds majority votein Parliament.18 The CIAA’s major functionis to investigate improper conduct or corrup-tion offences by those holding public office. Italso performs a preventive function throughits role as an ombudsman – by recommend-ing corrective measures and educating thepopulation.19

Republic of Korea. The Anti-Corruption Actwas passed in 2001 and the Korea Indepen-dent Commission Against Corruption(KICAC) was formed in 2002. Its functionsinclude policy making and coordination,monitoring corruption, protecting whistle-blowers, encouraging civil society involve-ment, improving the legal framework andpromoting ethical values in society.20 Unlikethe other ACAs, the KICAC cannot investi-gate corruption cases itself; it has to rely onthe Board of Audit and Investigation andother agencies.21

A government committed to curbingcorruption should demonstrate its politicalwill by providing the ACA with adequate staffand funding and the ability to operate inde-pendently without political interference. Inalmost all countries in the region, the ACAsare dependent upon government funding andseveral face severe budgetary constraints. Inmost cases the heads of the ACAs areappointed by political leaders or by commit-tees that include politicians and generallyreport to the legislature or the parliament.

Independence. One of the first issues is wherethe ACA is located in government. If the agencyreports to the office of the Prime Minister, forexample, it can be used as a weapon againstpolitical opponents. In the Asia-Pacific region,the experience has been mixed. Some govern-ments, such as those in Singapore and HongKong (SAR), China, have resisted this temp-tation; others have not. Ideally the ACA


should be a completely independent body.Where the ACA is not structurally indepen-dent, its power is dependent on the strengthof its bureaucratic and political patrons, whodepending on the environment, can be verypowerful or very weak. In some cases, a com-bination of outside accountability and strongpolitical support from the press and the pub-lic can overcome the absence of formal guar-antees of independence. The autonomy of theACA can also be strengthened by ensuringthat the selection and appointment of theexecutive(s) of the ACA is a shared responsi-bility of several institutions (Table 6.2).22

ACAs in most countries do not requireany formal complaint to investigate corrup-tion; some have the authority to both investi-gate and prosecute; others also have the powerto investigate corruption in the privatesector.

Another important issue is independencefrom the police. Some agencies do have thisadvantage, but others do not, so a corruptpolice force may be free to investigate its ownmembers. One can also examine the recordsof these agencies in pursuing the ‘big fish’ orsenior officials. Again the record is mixed,with some agencies doing very little to addresscorruption by the powerful. Staffing andbudgets too can vary considerably, Macao’sCAC, for instance, spends over $22 per capitaof population23 compared with only $0.08 inIndonesia (Table 6.3).24

Oversight, accountability and control. Theability of the ACA to work in an unbiased waywill depend on appropriate checks andbalances as well as constant scrutiny throughvarious oversight mechanisms. Hong Kong’sICAC, for example, has its activities examinedby four independent committees whichinclude representatives from civil society, inaddition to an independent ICAC ComplaintsCommittee which receives, monitors and

TABLE 6.2APPOINTMENT OF CHIEF EXECUTIVE OF

SOME ACAS IN THE ASIA-PACIFIC REGION

Appointment head of the ACA

Hong Kong (SAR), The Commissioner is appointed by the chief execu-China tive. The Commissioner has the power to appoint,

discipline and dismiss officers.

Indonesia Indonesia’s Commission for the Eradication of Cor-ruption (KPK) is appointed by Parliament from a listof candidates provided by the President. The list ofcandidates is prepared by a selection committee ap-pointed by the Government.

Malaysia Director of ACA is appointed by the King on theadvice of the Prime Minister from amongst membersof the civil service.

Republic of Korea In the Republic of Korea, the President appoints thechairman and the standing members of the KoreaIndependent Commission Against Corruption. ThePresident designates three members, while the Par-liament and the Chief Justice of the Supreme Courtalso recommend three members each.

Singapore The Director of the CPIB is appointed by the Presi-dent on the recommendation of the cabinet.

Source: Based on UNDP 2005.

TABLE 6.3STAFF AND BUDGETS OF ANTI-CORRUPTION

AGENCIES, 2005

Number Budget Per capitaof staff ($m) expenditure ($)

Australia 110 14 2.00

Hong Kong (SAR), China 1,194 85 12.32

India 4,711 30 0.28

Indonesia 305 18 0.08

Macao (SAR), China 112 11 21.72

Philippines 957 12 0.15

Republic of Korea 205 18 0.37

Singapore 82 8 1.71

Thailand 701 * 9 0.14

Note: *2004 data as the 2005 data are not available.

Sources: Central Bureau of Investigation 2006; Commission AgainstCorruption 2006; Davidsen et al. 2006; Independent Commission AgainstCorruption (2006a; 2006b); Korean Independent Commission AgainstCorruption 2006; Office of the Ombidsman – Republic of the Philippines2006; Office of the National Counter Corruption Commission 2006;Republic of Singapore 2007.


reviews all complaints against the Commis-sion.25 Another way to enhance oversight isto make the ACA accountable to more thanone authority. Some countries have decidedto shift reporting lines from a single-personinstitution such as the Prime Minister to theparliament, allowing various political partiesto scrutinize the activities of the ACA.26

Focus. The agency’s mandate needs to be prac-tical and carefully focused. Many countriespropose the Hong Kong approach (prevention,investigation and education/awareness)

Whether a countryhas chosen a singleor multi-agencyapproach, successin the fight againstcorruption dependsto a great extent oncooperativerelationships withother elements ofgovernment

though their agencies have neither theresources nor capacity to emulate Hong Kong(SAR), China. The most successful agencieshave a clear focus (Table 6.4).

Coordination. Whether a country has chosena single or multi-agency approach, success inthe fight against corruption depends to a greatextent on cooperative relationships withother elements of government. Unfortunately,this is rarely the case, and it probably breaksdown often even in cases where it has beenachieved. As a result, agencies are regularlyfrustrated by their inability to secure infor-mation, cooperation and prosecutions. InIndonesia, however, the KPK has beencharged with coordinating and supervising allinstitutions involved in anti-corruption activi-ties.27 Bhutan has established a nationalAnti-Corruption Council to coordinate effortsof various stakeholders and plan and reviewthe effectiveness of anti-corruption policies.

Public CredibilityPublic CredibilityPublic CredibilityPublic CredibilityPublic Credibility

Finally, how does an ACA ensure its credibi-lity among members of the public? The follow-ing three aspects are important indicators:

Consideration of all complaints. Does thepublic perceive that all complaints, no matterhow small, will be followed up on? Whatproportion of complaints does it investigate?Does it investigate anonymous complaints?The Republic of Korea, for example, haspenalized the disclosure of an informant’sidentity or any information that would revealthis to encourage citizens to come forwardwith their complaints.28 This goes hand inhand with laws to protect whistle-blowers.

Public perceptions. Does the public believe thatthe agency investigates effectively and doesnot abuse its powers? Does the public believe

TABLE 6.4ANTI-CORRUPTION AGENCIES: SOME EXAMPLES OF FOCUS

Focus

Hong Kong The ICAC Ordinance requires the Commissioner to(SAR), China investigate ‘any’ suspected corruption. The agency’s

policy has been to take this literally, pursuing allcorruption allegations without a priori selection cri-teria, although it is within the sole discretion of theAttorney General to decide which cases to prosecute.ICAC first focused on the public sector and only laterstarted to focus its attention on the private sector. In1974, 80% of the cases were from the public sector,today about 60% are from the private sector. ICAChas a comprehensive mandate. However, trials forminor cases are costly so there is a selection processthat takes place at that level (if the offender admitsthen prosecution for minor cases, will be avoided).

Indonesia Investigate, indict and prosecute corruption casesinvolving law enforcement officers, or governmentexecutives that have drawn the attention of thegeneral public and/or involve loss to the state of atleast 1 billion Rupiah.

Malaysia Receive and consider any report of corrupt practices.Republic of Korea KICAC has no mandate to investigate. It refers all

investigation to the Audit Office or the Prosecutor. Ifa report regarding suspected corruption involves ahigh-ranking official then the case is directly referredto the Prosecutor. KICAC does not deal with theprivate sector.

Singapore Also, Singapore’s CPIB has authority to investigateany crime that comes to light in its corruption inves-tigations – a power that most such agencies do nothave. It investigates complaints on corruption in thepublic as well as the private sector.

Note: At the time of publication $1 = IDR 9,300.Source: Based on UNDP 2005.


An ACA is also adouble-edged swordand can be used by

an incumbentgovernment for

good or dishonestpurposes

that the ACA will keep their corruption re-ports confidential? Is it seen as incorruptible?

Enforcement. Does the agency enforce the anti-corruption laws impartially, or does itconcentrate on petty corruption and ignoregrand corruption? Are the rich and powerfulprotected from investigation and prosecutionfor corruption offences? How are complaintsagainst the agency’s own officers dealt with?

Within ACAs of the Asia-Pacific region,the two strongest in this respect are those inHong Kong (SAR), China and Singapore. InHong Kong, for instance, many complainants,rather than preferring to remain anonymous,now identify themselves. Over the periodfrom 2001 to 2006, the agency received24,000 complaints of which 83 per cent werepursuable. Meanwhile 2,751 people wereprosecuted of whom 83 per cent were con-victed and over 1,000 civil servants weredisciplined.29

The CPIB in Singapore is less forthcom-ing with information on its operations. TheCPIB’s small staff complement of 82 personscompels it to focus on investigation of corrup-tion cases at the expense of the other func-tions of prevention and education. Indeed, theCPIB’s Achilles heel is its neglect of publicrelations.30 It has, however, publishedopinion polls on corruption. In 2005, nearly90 per cent of the respondents believed thatcorruption was very much under control and86 per cent felt that in Singapore corruptioncontrol was better than in other countries.According to the respondents, the low level ofcorruption in Singapore could be attributedto the political will to keep corruption undercontrol; the heavy punishment for corruptionoffences; and the effectiveness of the anti-corruption law.31 The CPIB has convicted aseries of high officials including, for example,in 1995 the Deputy Chief Executive of thePublic Utilities Board for accepting bribesfrom contractors.32

Some of the other agencies have a lowerreputation. This may partly be the result ofunder funding, however, in a number ofcases agencies pursue political agendas, ortheir members themselves are not abovecorruption.

It should be stressed that an ACA is onlyas effective as its incumbent govern-ment wants it to be. An ACA can only beindependent, permanent, accountable, credi-ble and effective if it is supported by agovernment that is committed to eradicatingcorruption. Any anti-corruption agency canbe overpowered by a corrupt government or acrooked system. An ACA is also a double-edged sword and can be used by an incumbentgovernment for good or dishonest purposes.

ACAs are not therefore the best solutionfor every country. What is needed first is aclear analysis of the political and economicsituation, power-relationships and culturalpatterns. This may well conclude that theright solution is an ACA. But it should not bedesigned or created until there is sufficientpolitical consensus on an anti-corruptionstrategy and agreement on what the agencywill do to implement that strategy effectively.

If a government decides to establish anACA, it can enhance the prospects for successby providing it with an adequate budget andsufficient staff, by not interfering in its dailyoperations and most importantly by resistingthe temptation to use it as a political weaponagainst critics or opponents. In the hands of aclean government, an ACA can be an assetand a powerful weapon.

Civil Service ReformCivil Service ReformCivil Service ReformCivil Service ReformCivil Service Reform

Attempts to reduce corruption within govern-ment will generally involve civil servicereform – reducing the incentives and oppor-tunities for corrupt behaviour among publicservants while increasing the likelihood ofbeing caught and punished. For this purpose,


Monitoring systems,must be carefullydesigned if they arenot to multiplybureaucratic proce-dures and ‘redtape’, which inthemselves increaseopportunities forcorruption

there can be four main strategies: merit-basedpersonnel policies; better salaries; strongermonitoring; less red tape; and a determina-tion to catch the ‘big fish’.

Merit-based Personnel PoliciesMerit-based Personnel PoliciesMerit-based Personnel PoliciesMerit-based Personnel PoliciesMerit-based Personnel Policies

The first prerequisite for a clean civil serviceis that candidates should be recruited andpromoted not on the basis of patronage buton that of fairness and merit. Some countriesin Asia had merit-based policies in the pastbut have not maintained this tradition andmake too many appointments on the basis offavouritism.33 Both the Philippines andThailand, for example, have civil servicecommissions to ensure that recruitment andpromotion in their civil services are fair,though they still do not always ensureappointments based entirely on merit.34

Better Civil Service CompensationBetter Civil Service CompensationBetter Civil Service CompensationBetter Civil Service CompensationBetter Civil Service Compensation

Cash and non-cash benefits are both impor-tant part of compensation packages. TheRussian curse ‘May you live on your salary!’illustrates the universal importance of payingcivil servants adequate salaries. Surveys inmany countries have identified low salariesas an important factor responsible for corrup-tion among civil servants. In Indonesia, a2001 national survey – comprising 650public officials, 1,250 households and 400businesses – found that all three groups iden-tified low salaries of civil servants as the mostimportant cause of corruption.35 Similarly, insurveys on corruption in five South Asiancountries by Transparency International in2001 and 2002 respondents identified thelow salary of employees in various sectors asa cause of corruption.36

Adequate salaries are not just importantfor economic survival they also confer statusin society. So the most obvious responsewould be to raise salaries and first and fore-

most to reduce the gap between those in thepublic and private sectors. However, this islikely to be expensive and governments maynot be able to pay enough to compete with thelevels of income from bribes. In any case,while this will reduce the motivation for pettycorruption, it is unlikely to reduce grandcorruption, which is caused less by need thanby greed. Non-cash benefits like recognition,titles, training and exposure-visit opportuni-ties can also be useful incentives underappropriate circumstances.

Closer Closer Closer Closer Closer MonitoringMonitoringMonitoringMonitoringMonitoring

Government will therefore need to supple-ment salary increases and merit-based promo-tions with tighter systems of monitoring andcontrol that can detect corruption swiftly andpunish it severely. This should alter themindsets of civil servants so that they see corruptactivities not as ‘low-risk, high-reward’ butas ‘high-risk, low reward’. Monitoringsystems, must however be carefully designedif they are not to multiply bureaucratic proce-dures and ‘red tape’, which in themselvesincrease opportunities for corruption.

Governments should also publicize provencases of corruption among civil servants, sincethe threat of ‘naming and shaming’ serves asa strong deterrent. The Chinese Governmenthas been taking stern action. Gan Yisheng ofthe Party’s Central Commission for Disciplineand Inspection reported in May 2007 that ithad sent a special team of inspectors acrossthe country to question local party bureaus,state-owned enterprises and banks. The teamalso looked at conspicuous acts of corruption,the buying and selling of government posi-tions, several dubious promotions and otheracts of malfeasance. They uncovered around$10 million in illicit payments and funds. After amonth-long nationwide ‘discipline’ campaign,nearly 1,800 officials confessed to their involve-ment in hundreds of acts of misconduct.37


The acid test ofthe political will of

a government istherefore its

determination toinvestigate

politicians andsenior bureaucrats

– and to punishoffenders

Reducing Red TReducing Red TReducing Red TReducing Red TReducing Red Tapeapeapeapeape

Corrupt civil servants love red tape. They seeit as a way of slowing down procedures andforcing users to join queues that can only bejumped by paying bribes. Governments mayinitially have devised these procedures tobuild internal checks but the result is oftencounter-productive, so they could cut downsubstantially on corruption by streamliningthese procedures. This is particularly impor-tant regarding what in Indonesia has beentermed, the ‘wet’ departments.38 Comparedwith the ‘dry’ departments, which do tradi-tional administrative work and have littlecontact with the public, the wet agencies dealwith many people outside the government andare typically concerned with money, planning,banking or public enterprises. They are alsousually generous with honoraria, allowances,service on committees and boards, and carrymany opportunities for foreign training.

Some governments in the region havemade determined efforts to reduce red tape.In 1998 the Republic of Korea established theRegulatory Reform Committee which withina year had reduced administrative regulationsby half.39

Catching and Punishing the ‘Big Fish’Catching and Punishing the ‘Big Fish’Catching and Punishing the ‘Big Fish’Catching and Punishing the ‘Big Fish’Catching and Punishing the ‘Big Fish’

In some countries corruption remains aserious problem since senior officials short-circuit corruption investigations by appealingto their protectors. The acid test of the politi-cal will of a government is therefore its deter-mination to investigate politicians and seniorbureaucrats – and to punish offenders.Prosecuting the rich and famous enhances thecredibility and efficacy of a government’s anti-corruption strategy and has the added advan-tage of deterring others, especially junior civilservants. One success in Indonesia was thejailing of the son of a former president,

initially for graft and later for arranging themurder of the Supreme Court judge who hadconvicted him. Similarly, the Chinese Govern-ment made a strong statement in 2007 byconvicting Zheng Xiaoyu, former Commis-sioner of China’s State Food and DrugAdministration for accepting more than$850,000 in bribes.

India too has caught some senior officials.The Central Vigilance Board in its 2005Annual Report said that it had prosecutedvarious officials from the Central Board ofExcise and Customs, including a commis-sioner and his senior staff. Other seniorofficials too have been dismissed as a resultof corruption include a commissioner of DelhiPolice; a chief engineer of the Ministry ofRailways; scientists from the Council ofScientific & Industrial Research; and a direc-tor of the Department of Health.40

Such cases are few and far between. InFiji, for instance, one of the most notoriouscases of corruption concerned the NationalBank of Fiji, a case which started in 1995 buthas yet to produce any results. Similarly, amore recent case in the Water & SewerageDepartment of the Ministry of Works con-cerned payments to contractors caused lossesof $9 million, resulting only in a $500 fineand the transfer of a senior water engineer.41

Curbing Corruption in TCurbing Corruption in TCurbing Corruption in TCurbing Corruption in TCurbing Corruption in Taxationaxationaxationaxationaxation

One of the most damaging forms of corrup-tion for government budgeting is in taxation.Much of this arises as a result of excessivered tape which opens up opportunities forinteractions between taxpayers and tax offi-cials. Nowadays one of the best ways ofreducing such interactions is through infor-mation technology which cuts transactioncosts, increases transparency and buildstrust. Technology also lowers the discretion-ary powers of tax officials, thus squeezing


opportunities for corruption. Introducing in-formation technology requires an integrated,simple and rational system. Among otherthings, this will also mean keeping rates mod-

SPECIAL CONTRIBUTION – STRENGTHENING PUBLIC OVERSIGHT INSTITUTIONS IN BANGLADESH

By Manzoor Hasan

erate enough to attract potential tax payersand minimizing the list of tax exemptions.42

Reducing tax rates and providing other taxincentives also encourages more businesses to

Even as Bangladesh has made impres-sive achievements in economic andsocial development, its success has beenmarred by failures of governance.Partisan politics penetrated all aspects ofpublic life, a problem that resulted in thedecline of public trust. For many years,the country was identified as one of themost corrupt in the world. Ineffectiveformal controls and lack of citizen-oriented anti-corruption accountabilitymechanisms added to the crisis of inte-grity. This called for a longer-termchange process with a strong reformregime that would sit at the core of thegood governance agenda in Bangladesh.

Effective public accountability mecha-nisms and ongoing parliamentary over-sight of Government activities areessential to promote democracy andeconomic development with a pro-poorfocus. While formal accountabilitymechanisms existed in the country, thegeneral perception, both in Bangladeshand abroad, was that they were politi-cized, often cumbersome, ineffective andlacked credibility. Confrontational poli-tics and a winner-take-all attitude hadled to a political culture where the twomajor political parties were constantlyat loggerheads, undermining the cred-ibility of the very institutions needed forgood governance. Other institutions ofintegrity faced a paucity of political willto tackle their dysfunctionality. No pub-lic debate and consultations occurred onthe merits and demerits of proposedpublic budgets. Dozens of nationalreports on misuse of power, lack of pro-priety and corruption went unheeded.

Yet, beginning in 2007, there hasbeen cause for hope. For more than adecade, I have kept a close eye on gover-nance issues and reform, and it is heart-ening to observe the growing politicaldisposition to move towards improvingoverall governance, including measuresagainst corruption.

Although Bangladesh had shownvery little inclination to comply withinternational standards on corruption,the interim Government that came topower in January 2007 acceded to theUnited Nations Convention AgainstCorruption (UNCAC), just one monthlater. Crucially, 2007 also saw the long-overdue implementation of a 1999 legaljudgment putting in place the necessaryframework for an independent judiciary.The process of operational separation ofthe judiciary from the executivecommenced on 1 November 2007. Thiswill gradually strengthen the overarch-ing framework of checks and balancesbetween the three branches of the State.

Next, under new leadership, thenational Anti-Corruption Commission(ACC) and related task forces under theNational Coordination Committee areprosecuting a number of high-profileindividuals on serious charges of corrup-tion, abuse of power and criminalactivities. A number of such cases havebeen successfully discharged, with inves-tigations in progress for many others.The reconstituted ACC is also formulat-ing its first strategic plan, which willset out a longer-term vision for the‘controlling, suppressing and preventing’of corruption in Bangladesh (Anti-Corruption Commission of Bangladesh,2007). In addition, the Government hasinitiated a series of significant institu-tional reform measures toward strength-ening of the Election Commission,Public Service Commission (PSC), theUniversity Grants Commission and localGovernment authorities. A new Chairand new members have been appointedto the PSC, in an effort to restorethat body’s image; in turn, they haveundertaken modifications in theexamination system to ensure that civilservice recruitments are transparentand fair.

Finally, driven by the top leadershipof the Government, the process offormulating a National Integrity Strat-egy (NIS) is under way, with full imple-mentation expected to begin at the endof 2008. This will offer an overarchingvision for further development andimplementation of good governance andanti-corruption reforms. Such a strategyis expected to highlight the need forpublic- and private-sector changes,involve public awareness campaigns,and seek international cooperation. Itwill be based on the premise that goodgovernance is fostered by encouragingand facilitating a process of dialogue andbuilding constituencies among keyparticipants, by creating demand withina wider rubric of public awareness.Thus, the NIS will seek to strengtheninternal controls in State institutionsand will aim to induce a shift in cultureby encouraging the adoption of citizen-owned accountability mechanisms.

All this is most welcome newsindeed. Ultimately, when reformshave been successfully implemented,Bangladesh will witness strengthenedinstitutions of accountability; strongercitizens’ accountability mechanisms,with effective participation of mediaand the private sector as partners; andstrengthened internal control measuresacross selected public sector agencies.Most importantly, it will have developedan ethics- and value-based foundationfor its public service.

Manzoor Hasan, a barrister by training,is the Director of the Institute ofGovernance Studies, BRAC University.He was the founding Executive Directorof Transparency International Bangladesh(1996–2003) and then the RegionalDirector (Asia-Pacific) of TI in Berlin.He was also the Deputy Executive Directorof BRAC.


enter the formal economy. Evidence from 68countries shows that between 1982 and 1999while the rate of taxation on profits fell from46 per cent to 33 per cent, revenues fromtaxation of profits rose from 2.1 per cent to2.4 per cent of the national income.43

Governments wanting to reduce corrup-tion in the tax system also need to reduce thepowers of individual officials. There are twostrategies for this. First, in countries wherethe same unit does assessment and adminis-tration they could re-engineer tax depart-ments to separate the two functions. Second,they should not assign tax officials to anyparticular jurisdiction but give them tasksrandomly.44

Another way to dent the monopolisticpower of tax officials is through competition.When the same task can be handled bymultiple officials, a taxpayer who is asked fora bribe can simply go to another. This kind ofcompetition between officials can drive downtheir price – even to zero, as is the case inmany developed countries. Tax reforms alsoneed to be accompanied by effective detectionand enforcement, which should includeimprisonment, large fines and confiscation ofillegally acquired assets – sanctions that mustbe harsh enough to discourage corruption.

One more measure is to reduce thenumber of ‘gatekeepers’ who can exert con-trol over a particular activity. One option isto ensure that for each kind of economicactivity there is a ‘one-stop’ licensing andregulation authority. This strategy forstreamlining business licensing has been putinto practice in many US states. India in 1999introduced a similar agency, the ForeignInvestment Implementation Authority.

It would also be valuable to reform thetaxation system. For example, in the early1990s, as much as 81 per cent of potentialtaxpayers in India were not captured by thetax net.45 To rectify this situation and thus

to expand the tax base, India adopted the‘one-in-six’: any person fulfilling one of sixcriteria must file a tax return irrespective ofhis or her level of income – a measure thatsignificantly extended the tax net.46

Governments could furthermore makemore use of taxes that are less susceptible tocorruption, such as value added taxes (VAT).However, an important issue for VAT is thetime it takes to issue refunds. While a longdelay may offer time for proper assessment,it also creates an incentive for bribing taxofficials. Tax authorities must thereforestrike a balance between proper scrutiny andprompt refunds.47

PrivatizationPrivatizationPrivatizationPrivatizationPrivatization

In addition to reforming public services,governments can also consider privatizing oroutsourcing some of them. This is oftensuggested cure for corruption as well asincreasing transparency and efficiency. Astrengthened private sector may also serve asa check to a government’s exercise of powerwhen it acts independently to defend itsinterests.48

However, this assumes that the privatesector itself will operate in an ethical fashionand that is likely to be less corrupt. This isfrequently not the case. Corruption, both‘petty’ and ‘grand’, is also rife in the privatesector. For example, in China in the first eightmonths of 2007 state prosecutors handled8,040 commercial bribery cases involvingmore than one billion yuan ($140 million).49

An alternative to full privatization is apublic-private partnership: the governmentmakes an arrangement with the privatesector to provide public infrastructure,community facilities and related services –with the partners sharing the investment,risks, responsibility and rewards. Whenintroduced for large-scale projects, however,

Governmentswanting to reducecorruption in the

tax system alsoneed to reduce the

powers ofindividual officials


People are nowstarting to believethey have a rightnot just to goodgovernment but alsoto see how thatgovernment worksand gain readyaccess toinformation

these have had mixed results; they seem tohave worked better on a smaller scale as partof local, grass roots actions.

As yet, there is relatively little researchon the social impact of privatizing socialservices. Most investigations have focused oneconomic efficiency rather than impact on re-distribution and the poor. It is clear thatgovernments need to be concerned not justwith whether services should be privatized butalso how. They have to undertake focusedmeasures to improve the chances that poorhouseholds will benefit. If policy is weakbefore privatization, it will also be weakafter privatization. Privatization is clearlyno substitute for a responsible policy ofredistribution.50

The Right to InformationThe Right to InformationThe Right to InformationThe Right to InformationThe Right to Information

In the past, even democratically electedgovernments have operated as fairly closedsystems, assuming paternalistically that poli-ticians and public officials knew best how togovern and no-one else needed to know howthey did it. They have therefore generally

preferred to reveal information only whenconvenient or when it served their ownpurposes.

In recent years, however, there has been amajor conceptual shift. People are now start-ing to believe they have a right not just to goodgovernment but also to see how that govern-ment works and gain ready access to infor-mation. For example, the process throughwhich the Indian Right to Information Actwas drafted and has come into force illus-trates the power of sustained public pressure.

Although the main human rights instru-ments do not spell out this right explicitly,international law supports the right tofreedom of expression. That includes not onlythe right to speak and write freely, but also toseek and receive information along with ideas.A number of countries have now started toenshrine this right in national legislation. In1990, only 13 countries had right-to-informa-tion (RTI) laws but by 2007 the number hadrisen to 70.51 Among these are eight Asia-Pacific countries, including China and India(Table 6.5). Thus far, no Pacific Islandcountry has adopted such a law, although thematter has been debated extensively in Fiji.However, in August 2006, Iosefa Maiava, theDeputy Secretary-General of the PacificIslands Forum, called for appropriatelegislation.52

Beyond national governments, there havealso been policies of information disclosurefrom a number of intergovernmental organi-zations. At the forefront, have been the inter-national financial institutions such as theWorld Bank and regional development banks.The World Bank, for example, adopted itsPolicy on the Disclosure of Information in1994. In 1997 UNDP also adopted a PublicInformation Disclosure Policy and UNESCOhas made a commitment to do so.

Most right to information laws have twomain components: first, they establish keycategories of information that all public

TABLE 6.5COUNTRIES IN ASIA AND THE PACIFIC WITH

RIGHT-TO-INFORMATION LEGISLATION

Countries with Official commitment to Sub-national legislation legislation adopt legislation

Australia Cambodia ChinaChina Indonesia IndiaIndia Mongolia IndonesiaJapan Nepal JapanRepublic of KoreaNew ZealandPakistanThailand

Notes: 1. The Philippines has an effective constitutional guarantee, aswell as a requirement for public bodies to adopt openness measures.2. One Malaysian state, Kelantan, has made an official commitment toadopt legislation.

Sources: Banisar 2006; Mendel 2007.


To be effective,information must

reach people

bodies are required to publish, proactivelyand routinely; second, they establish the rightof citizens or institutions to request andreceive specific information.

Proactive PublicationProactive PublicationProactive PublicationProactive PublicationProactive Publication

The more effective right to information lawsspecify information that must be disclosed ona proactive basis, including information thatwill help expose corruption. In India, theRight to Information Act requires publicbodies to publish information on:

• Procedures. Decision-making procedures,including lines of accountability.

• Pay. The pay of all employees, along withregulations regarding compensation.

• Budgets. The budget for each agency,along with the particulars of all proposedexpenditures, and details of all disburse-ments.

• Subsidies. Details on subsidy programmes,including amounts allocated and the ben-eficiaries.

• Concessions. The particulars of recipientsof concessions, grants or authorizations.53

In India, the Government proposed toamend the RTI Act so as to exclude from itsome administrative files and Cabinet papers.In 2006, however, following intense pressurefrom civil society organizations these planswere dropped.

In China the ordinance on Openness ofGovernment Information also focuses on thepublication of financial and developmentinformation. It requires public bodies todisclose economic and social developmentplans, statistical information on nationaldevelopment and reports on fiscal budgetingand final accounts. Fees charged for adminis-trative work, approvals, major buildingworks, policies on poverty alleviation and a

range of social programming are alsopublished. It also requires local governmentsto release a wide range of information onrevenues, expenditures, special funds, land-use planning and subsidies, contracting,allocations for emergencies and social relief.54

To be effective, this information must ofcourse reach people. In Thailand, the 1997Official Information Act requires publicbodies to publish certain information in theofficial gazette and to make other informa-tion available for inspection.55 The Indianlaw goes further – requiring that the informa-tion be disseminated widely and in a formaccessible to the public including, subject tocost limitations, in local languages.56

Other countries outside the region havemore extensive publication strategies. Mexico,for instance, requires the information beavailable in electronic form, including througha publicly accessible computer that has facili-ties for printing.57 The United Kingdom, onthe other hand, does not specify the informa-tion be published, but requires every publicbody to develop a publication scheme, settingout what it will publish and how much it willcharge – a scheme that has to be approvedby the Information Commissioner.58 Theadvantage is that it allows for the amount ofinformation to increase progressively overtime as capacity increases.

Requests for InformationRequests for InformationRequests for InformationRequests for InformationRequests for Information

The second main component is the requestprocedure. This allows individuals and orga-nizations investigating corruption to ask forprecise information, which in principleshould allow them access to just about every-thing. In practice, however, they will findtheir path blocked by long lists of ‘exceptions’.

One of the main exceptions, renderingmany documents off limits, is nationalsecurity. Indeed in many countries the laws


One way topromote positiveparticipation is toensure that officialsare engaged fromthe outset

totally exempt certain security or intelligencebodies supposedly on the grounds that suchinformation would be beneficial to a potentialenemy. Whether or not this is actually thecase, it also denies citizens information onwhat is being paid and to whom. This is amajor issue since in most countries’ defenceusually has one of the largest budgets, with aconsiderable element of discretionary spend-ing and is thus highly susceptible to corrup-tion. There are, however, overrides aroundthis. India, for example, while generallyexcluding intelligence agencies, does allow forthe disclosure of relevant information‘pertaining to allegations of corruption orhuman rights violations’.59

Governments may also be reticent aboutpublishing details of internal decision-mak-ing. They may believe that if the minutes ofall discussions could surface subsequently innewspapers, politicians and public officialswould be less willing to express theiropinions frankly. Unfortunately, they usuallyoverreact to this possibility by drafting theexception in unduly broad terms. Under theJapanese law, access to information may berefused on the grounds that it would un-necessarily cause ‘confusion’.60 The Thai lawsimilarly excludes all internal opinions andadvice, although this does not cover technicalor factual background material.61

Since these exceptions could readily beused to hide corrupt activity it is importantthat the legislation also includes the possibi-lity of overrides. Both the Indian andJapanese laws allow public bodies to overrideexceptions when this is judged to be in theoverall public interest, which is often the casewhen the information relates to corruption.62

Other Disclosure LegislationOther Disclosure LegislationOther Disclosure LegislationOther Disclosure LegislationOther Disclosure Legislation

Outside of general right to information laws,most countries include disclosure rules in

other pieces of legislation, allowing the publicto find out. Some ways include disclosing thesalaries of senior public officials, using landregisters to identify the owners of propertyand inspecting the ownership structures ofpublicly listed companies.

In the Philippines, for instance, senior of-ficials are required by the Constitution to pub-licly file a declaration of their assets, liabili-ties and net worth. This applies to the Presi-dent, Vice-President, officers of the armedforces with general or flag rank, and mem-bers of the Cabinet, Congress, Supreme Court,Constitutional Commissions and other con-stitutional offices.63 In addition, national leg-islation requires all public officials to file apublicly accessible statement of assets, liabili-ties and net worth, along with a disclosure ofbusiness interests and financial connec-tions.64

Encouraging AccessEncouraging AccessEncouraging AccessEncouraging AccessEncouraging Access

Legislation is, however, only the first step.The highest levels of government also have tosustain their support and public officials haveto engage positively and meet their obligationsfulsomely. This requires some fundamentalreforms. For many government bureau-cracies, this will involve considerable rethink-ing since they have typically been engineeredfor the purpose of not sharing information.Without adequate preparation, they cantherefore find themselves inundated withpetitions to which they are unable to respond,leading to long delays.

One way to promote positive participa-tion is to ensure that officials are engaged fromthe outset. They need to be involved in alldebates on the right to information and havethe opportunity not just to understand theobligations but also to appreciate the benefitsthey can derive. Initially officials can feelthreatened, but their nervousness usually


SPECIAL CONTRIBUTION – SOLUTIONS FOR PREVENTING AND CURBING CORRUPTION IN CHINA

By Prof. Zengke He

Contd...

Corruption in China has underminedChinese citizens’ trust in the Govern-ment and their support for it. Corrup-tion has weakened China’s internationalcompetitiveness and reputation, anddeprived its citizens’ of opportunities toenjoy a better life, especially among thepoor.

In order to prevent and combatcorruption more effectively, it is myview that China has to make greaterimprovements in the following areas:

Firstly, there is a need for China tomake its Government more accountableto the people by introducing open andcompetitive elections into its politicalsystem at various levels. Open andcompetitive elections can empower thepeople and enable them to choose amongdifferent political elites. As shown inother countries in the world, wherethere are alternatives for the people tochoose, the political establishment wouldhave stronger motivation to act in thebest interests of its constituencies.

Secondly, the media should be mademore independent from the control andinterferences of certain governmentofficials. In developed countries, themedia is considered the fourth ‘publicpower’ besides the legislature, executiveand judiciary, playing a vital role ofchecks and balances on the decisionsand actions of governments and publicofficials. There are numerous caseswhere journalists from the private newsmedia are engaged in investigativereporting. Corruption is uncovered andpublicized, ruining the reputation ofcorrupt officials and bribers. Somecorruption scandals have caused suchgreat public outrage to force the govern-ments to take systematic measures totackle corruption. There are many goodlessons for China from other countries,when it is mobilizing social forces torein in corruption. A freer and more robustmedia can become a powerful ally of thegovernment to cope with corruption.

Thirdly, it is necessary for China tomake the law-making and policy-

making processes more inclusive andparticipatory for various stakeholders.The main function of public policies andlaws is to redistribute social resourcesand justice, influencing various socialgroups. If there is no legal way toinfluence these processes, the rich willthen try to influence policy processesby bribes, and the poor will bemarginalized, having no say in thedecisions and laws that will affect theirlife. The Chinese Government shouldcontinue to broaden its engagementwith citizens, civil society organizations(CSOs), and the private sector throughpublic hearings, public consultations viathe media, the internet and round-tablediscussions, etc. Currently, there are manypilots of public hearings about govern-ment decisions and consultations on leg-islation which are organized on an adhoc basis. It is now time to move to sys-tematic and standardized arrangements.

The fourth aspect is to make publicaffairs and processes more transparent.Access to government information bycitizens is a precondition for citizens toknow how the government works. Theright to public information is also abasic right of citizens enshrined in theChinese State Constitution. Trans-parency in government affairs is one ofthe most effective ways to preventcorruption. Access to information laws,standards and mechanisms allow thepublic to access government informationeasily and set up remedies for citizensto hold governments and officialsaccountable for failing to meet suchstandards. Among these, e-governance isproven an efficient, low-cost way tomake government information accessibleand transparent. Transparency ingovernment affairs can also overcomethe culture of secrecy within bureaucra-cies to expose the administrativeprocesses to greater public scrutiny.

The fifth area where China shouldlook into in order to fight corruption isindependence and professionalism of thejudiciary. An independent and fairjudicial system can play a key role in

enforcing laws against corruption, whilecorruption in the judiciary will destroypublic confidence in governments’efforts to combat corruption. This isbecause the judiciary is often said to bethe last gatekeeper of justice. If it issusceptible to interference by the admin-istrative branch or other politicalpressure, it would not be able to act asan independent third party to make fairjudgment on governments’ decisionsand provide legal remedies for citizenswhen their rights and interests areunlawfully infringed upon by the admin-istrative branch. Given the key role ofthe judiciary, the professional standardsof judges are of great importance. With-out high professional standards, thequality of judicial decisions cannot beguaranteed. In order to improve theindependence and professionalism of thejudiciary and prosecution services,reforms should be carried out on suchsystems as selection and appointmentof judges and prosecutors, financingcourts and prosecution services, higherremuneration schemes for judges andsecure tenure for judges, etc.

The sixth area is to continue publicadministration reform by makinggovernment regulations less and betterand public services more efficient andtransparent. Complicated administrativeregulations often create a lot of redtapes and thus give rise to more oppor-tunities for bribery taking and giving.In the past three decades, China hasintroduced several rounds of publicadministration reforms in response tothe needs of the emerging market-oriented economy. As China continuesits socio-economic reforms and reorientsits development policy towards balanceddevelopment with greater equity, whatChina needs to do is to launch a newround of administrative reform tofurther streamline its administrativeregulations and improve public servicedelivery. Better regulations mean thatthe regulations should be simple, clear,coherent, consistent and enforceable.Relevant regulatory bodies should be


officials. The very poor are therefore mostlikely to benefit via the activities of NGOs orother institutions of civil society.

Unfortunately, even NGOs do not alwaysuse their rights. Those that do so mostactively are generally those that were involvedin the struggle to obtain a right-to-informa-tion law, since they are committed to makingit deliver the desired benefits. NGOs are alsomore likely to exercise their rights if they arepursuing a specific objective such as deliver-ing basic entitlements to the poor.

There is also potential for abuse. Somepeople will use RTI to pursue personalagendas. Civil servants, for example, some-times file RTI cases against colleagues whohave been promoted over them or for otherpersonal reasons. These and other requests,counter to the spirit of the right to

made more independent and professionalso that they can perform in a transpar-ent and effective way and are subject topublic scrutiny.

Seventh, there is a need to streng-then the institutions of external audi-tors. External auditing on governmentbodies and public institutions is a verypowerful mechanism to reveal corrup-tion and deter public officials fromcorruption. The Chinese Governmentneeds to strengthen the institutions ofexternal auditors, make external auditsmore regular, publish the audit reportsand take strong and prompt measuresagainst those officials who are found tobe corrupt.

The eighth area of anti-corruptionmeasures is to breed professional andbusiness ethics via a process of consen-sus building. There are no perfect laws,and law enforcement is both costly andtime-consuming. Therefore, it makessense to raise the ethical standard ofcivil servants and businessmen througheducation and training. Codes of conductand ethical standards are more likely to

Contd...

The very poorrarely exercise theirrights fully

subsides when they find that the fearedconsequences do not materialize. One way toovercome their concerns is to provide themwith training where they can learn about theprocesses alongside the representatives of civilsociety who are likely to be asking for infor-mation.

While the information is in principleavailable to all, in practice it tends to beaccessed more by the wealthy and highereducated. The very poor rarely exercise theirrights fully. They may be able to take advan-tage of information that is disclosed automati-cally, in the media for example, but they areless likely to request information themselves– hindered perhaps by unfamiliarity with theprocesses, illiteracy, cost, the time needed, thedifficulty of making a request or simplybecause they fear, or do not trust public

be abided by if officials and businessleaders participate in the codification ofrules and make their voices heard.Meanwhile, professional ethics could beeffective if they are tied with the careerdevelopment of civil servants. Similarly,business ethics, including corporatesocial responsibilities (CSRs) could bemade more effective if the compliancewith standards positively influence thereputation and profit of the relevantcorporations, and vice versa.

The ninth area is to create a morefavourable policy and regulatoryenvironment for civil society organiza-tions. A strong and active civil society isa forceful check and balances on statepower. The watchdog role of civilsociety on the potential abuse of statepower cannot be replaced by any othergovernment supervision bodies. Makingcivil society independent from the stateis the first step for the development ofcivil society organizations (CSOs). TheGovernment needs to improve the legaland policy environment for civil societydevelopment, reduce the current restric-

tions on civil society organizations withregards to registration, donation, tax,etc., encouraging CSOs to criticize thewrongdoings of government officials.

The tenth and final area is to makeit easier for the victims of corruptionand whistle-blowers to report corruptioncases. Legal reform is needed to makethe victims of commercial bribes seeklegal remedies and get compensation ina less costly and time consuming way.Whistle-blowers should be protected bythe law for their personal safety andcareer development. Confidential andrigorous complaint procedure to dealwith various complaints should be putin place. There is also a need to findways to protect reporters who engagein objective investigative reporting.

Prof. Zengke He, Executive Director, ChinaCenter for Comparative Politics &Economics. His main publications are‘Contemporary Chinese Politics’ and ‘NewPath to Combating Corruption: Study onthe Issue of Corruption in TransitionalChina’.


Governments mayuse new technology

to make theiractivities more

transparent but theycan also misuse itto exercise greater

control over thelives of their

citizens

information, can absorb much of the time ofRTI focal points and reduce their capacity torespond to genuine cases.

Overall it is probably too soon to judgewhether RTI legislation has worked. India hashad some success but in the seven other Asiancountries it is too soon to say. They have onlyhad their laws for a short time; indeedChina’s legislation does not even come intoforce until May 2008. In any case, access toinformation is only one factor impacting oncorruption; so it may be difficult to identify aspecific outcome of RTI processes.

e-Governancee-Governancee-Governancee-Governancee-Governance

Developments that facilitate transparencyentail the development of right to informa-tion communications technology (ICT) andthe extension of e-governance. But there aredangers in this. Governments may use newtechnology to make their activities moretransparent but they can also misuse it toexercise greater control over the lives of theircitizens. Corrupt officials too may also be ableto exploit such systems to their ownadvantage.

Nevertheless, governments and serviceproviders can use new technology to becomemore accountable and responsive. India, forexample, in 1998 introduced ICT in courtmanagement and reduced the huge backlog inthe Supreme Court. This has now encouragedthe government to formulate a five-year planto computerize all 2,500 court complexes andprovide laptops to over 15,000 judicial func-tionaries. There are also plans to create adatabase of new and pending cases and todigitize the law libraries and court archives –all of which can help combat corruption inthe judiciary.65

In an effort to propagate the idea of zerotolerance for corruption, India’s CentralVigilance Commission (CVC) has begun to

share with citizens a large amount of infor-mation related to corruption. The CVCwebsite has published the names of officersfrom the elite administrative and revenue ser-vices against whom corruption investigationshave been ordered or on whom penalties havebeen imposed. While promoting transparencyand accountability, this also serves as apreventive tool. Any citizen can lodge acomplaint. Although the complaints cannotbe anonymous the Commission has to ensurethat the identity of the complainant remainssecret.66 The Commission scrutinizes theinformation and then as appropriate passesthe information on to the Central Bureau ofInvestigation or the Income Tax authorities.

Some public authorities are also usingICT to minimize corruption applications forlicences and other permits. In 1999, the SeoulMetropolitan Government, for example,launched an Online Procedure Enhancementfor Civil Applications (OPEN) covering 54common procedures. By March 2001, closeto 1.5 million people had visited the websiteand there had been 39,000 civil applications.The OPEN system has made the administra-tion much more transparent, as those officialsresponsible for corruption-prone areas, suchas permit or approval procedures, now haveto upload reports and documents to enablecitizens to monitor the progress of theirapplications.67

Another process that can benefit greatlyfrom computerization is land registration. InIndia, farmers who need a bank loan areusually required to show a copy of the Recordof Rights, Tenancy and Crops. For this theyoften have to rely on the village accountantwhose records are not open to publicscrutiny. Their activities take anywherebetween 3 and 30 days, depending upon theimportance of the record for the farmer, alongwith a bribe, which could range from $2 to$50, or up to $250 if the record has to


Computerizing acorrupt system willmake the situationeven worse

include additional dubious details.68 In theState of Karnataka this process has beentransformed by the arrival of the Bhoomiproject which has computerized the recordsand opened them for public examination.This has now been extended to other states.

ICT is not in itself a solution. Compute-rizing a corrupt system will make the situa-tion even worse, since those engaging inpublic sector corruption can take advantageof advanced technologies and porous interna-tional borders to move their funds around.

If governments are to minimize theserisks they must design their systems tocounter corruption. Many governmentshave placed the development of nationale-government plans in the hands of IT staffin ministries. While they may be able tomake the technology work, they are unlikelyto know enough about corruption. Theyneed to work therefore with legal and anti-corruption experts.

E-governance needs to develop on acontinuous basis and also to be guided by thepriorities of citizens. The opportunities forsuch involvement are likely to expand in theyears ahead. Second-generation telecentres,combined with the increasing power ofmobile devices can enable citizens to partici-pate in governance not just once in five yearsthrough the ballot box, but on a daily basisthrough their interaction with honest andresponsive administrations.

Cross-Border CooperationCross-Border CooperationCross-Border CooperationCross-Border CooperationCross-Border Cooperation

In an increasingly integrated global economy,corruption too has become a cross-borderissue. Some argue that globalization will havea positive effect on corruption and that open-ing up national processes to internationalscrutiny and the pressures of a free marketshould make them more transparent. Othersclaim that deregulation of markets in theSouth has in many ways made developing

countries more vulnerable to corruption thanever. There is probably an element of truth inboth propositions, but it seems clear thatcountering corruption will need determinedaction by governments, international agenciesand international corporations workingtogether.

The most important step forward ininternational cooperation has been the UnitedNations Convention Against Corruption(UNCAC). Entered into force in December2005, this is the first global legal instrumentdesigned to achieve far-reaching reforms tocombat corruption. It also presents for signa-tories important anti-corruption mecha-nisms, including public-sector reform, theright to information, extradition laws, anti-money laundering laws, corporate socialresponsibility, strengthening the indepen-dence of anti-corruption agencies and ethicalcodes of conduct for civil servants.

Table 6.6 shows the regional pattern ofsupport of the Convention. Within the Groupof 8 industrialized nations, all are signatories.However only five have ratified (Canada,France, Russia, the United Kingdom and theUnited States), meaning those that have onlysigned the Convention are not willing to belegally bound by it. Most Asia-Pacific coun-tries that have signed the convention haveabstained from being bound by paragraph 3of Article 66, which deals with ‘Settlement ofDisputes’ between state parties, with possibledeference to the International Court ofJustice if a deadlock occurs. Other partieshave abstained from this paragraph includ-ing the United States, South Africa and theEuropean Union.

In addition to UNCAC, countries in Asiaand the Pacific are signatories to a number ofother relevant international treaties. The onlyregional agreement for Asia-Pacific is theADB/OECD Regional Anti-CorruptionAction Plan (Box 6.1). The Pacific Plan, wasendorsed in October of 2005 by all member


states of the Pacific Island Forum. The Plan isa central tool in the fight against corruptionin the region (Box 6.2). The Plan endorses aregional anti-corruption strategy which seeksto strengthen legislation and other measuresin many Pacific Island countries as well ascreate regional anti-corruption institutionssuch as a regional Ombudsman and an Auditand Customs Office.

In addition, across the region there areover 70 bilateral treaties,69 specifying legalsurrender by one country to another of anindividual accused or convicted of an offenceand agreeing on procedures gathering evidencefor use in criminal cases, transferring crimi-nal proceedings to another state or carryingout foreign criminal sentences. Some ofthe agreements also cover mechanisms forrecovering corrupt funds and assets.

ContrContrContrContrControlling Tolling Tolling Tolling Tolling Transnational Corporationsransnational Corporationsransnational Corporationsransnational Corporationsransnational Corporations

Transnational enterprises have made animportant contribution to economic growth

nism, the Initiative has contributed to the fostering of anti-corruption reforms. Its role in supporting the implementationof the UN Convention Against Corruption and other key anti-corruption instruments is recognized by governments, inter-national and donor organizations, civil society and the privatesector.

The 28 member countries and economies that endorsed theAnti-Corruption Plan and were members of the Initiative atthe time of publication are: Australia, Bangladesh, Bhutan,Cambodia, China, Cook Islands, Fiji Islands, Hong Kong(SAR), China, India, Indonesia, Japan, Republic ofKazakhstan, Republic of Korea, Kyrgyz Republic, Macao(SAR), China, Malaysia, Mongolia, Nepal, Pakistan, Republicof Palau, Papua New Guinea, the Philippines, Samoa,Singapore, Sri Lanka, Thailand, Vanuatu, and Viet Nam.

Membership in the Initiative is open to any economywithin the Asia-Pacific region that recognizes the needfor action against corruption. Those members undertakecorresponding action and commit to the standards of theAction Plan as well as to the implementation mechanisms.

Source: ADB/OECD Anti Corruption Initiative for Asia-Pacific. n.d.

TABLE 6.6A REGIONAL SNAPSHOT OF THE UNCAC

Developing countries Number Number ratified,by region who have signatories acceded, approved,

ratified the UNCAC* accepted succeeded

Latin America, Caribbean** 26/38 (68%) 25/38 (66%)Eastern Europe & CIS 22/29 (76%) 21/29 (72%)Africa 33/44 (75%) 28/44 (64%)Arab States 15/18 (83%) 10/18 (56%)Asia Pacific*** 19/35 (54%) 10/35 (29%)

* based on UNDP programme countries** Including the overseas dependencies of Turks & Caicos, British

Virgin Islands, Montserrat, Aruba and Netherlands Antilles whichare all UNDP programme countries

*** The Cook Islands are in ‘free association’ with New Zealand andcan independently sign up to UN conventions whereas Niue andTokelau, while UNDP programme countries, have their foreignaffairs represented fully by New Zealand and are therefore notincluded.

Source: United Nations Office on Drugs and Crime. n.d.

BOX 6.1ADB/OECD ANTI-CORRUPTION INITIATIVE FOR ASIA-PACIFIC

The ADB/OECD Anti-Corruption Initiative for Asia-Pacificwas launched in 1999 and supports its 28 member countriesand economies in strengthening anti-corruption policies andframeworks. The process is driven by the commitment of itsmembers to the goals, standards and implementation mecha-nism laid out in the Anti-Corruption Action Plan for Asia-Pacific.

The Action Plan sets standards for member governmentsin four areas: effective and transparent systems for publicservice; anti-bribery actions, promoting integrity in business,and public involvement in the fight against corruption. Theseareas reflect the range of issues covered by the UN Conven-tion Against Corruption as well as other relevant interna-tional instruments such as the OECD Anti-Bribery Conven-tion.

A set of mechanisms supports the implementation of theAction Plan by the Initiative’s member governments. Thesemechanisms include the facilitation of regional policy dialogueand measurement of progress in anti-corruption reform;provision and dissemination of good practices to support theregional dialogue; capacity building, as well as the facilitationof partnerships with relevant constituencies in and beyondthe Asia-Pacific region, such as UNDP.

Through this unique implementation and review mecha-

in the region, but they have also been involvedin dishonest and illegal practices, in somecases colluding with corrupt leaders, particu-larly in the extraction of natural resourcesand in pharmaceuticals.


BOX 6.2THE PACIFIC PLAN’S STRATEGY TO FIGHT CORRUPTION

The Pacific Plan is a regional agreement endorsed in October2005 by the member states of the Pacific Island Forum –Australia, Cook Islands, Federated States of Micronesia, Fiji,Kiribati, Republic of Marshall Islands, Nauru, New Zealand,Niue, Palau, Papua New Guinea, Samoa, Solomon Islands,Tonga, Tuvalu and Vanuatu. Tokelau and Timor-Lestecurrently have ‘observer status’.

The Pacific Plan contains robust initiatives to fight corrup-tion. In its first implementation phase (2006 to 2008), theseinclude: setting up regional ombudsman and audit offices,establishing a regional customs revenue service, leadershipand accountability codes of conduct, setting up independentregional anti-corruption agencies, increasing the statisticalcapacity of the region on governance indicators, strengthen-ing the judiciary through stronger departments of attorneygeneral with judicial training and education. Along with these

In the past, manycompanies whichwould not dream ofbribing officials intheir own countrieshave seen nothingwrong with briberywhen operatingabroad

All would claim to be acting responsiblyand contributing to prosperity and the deve-lopment of sustainable markets in thecountries in which they operate. In practice,however, they tend to operate more responsi-bly in developed countries where they areusually under closer scrutiny. In the past,many companies which would not dream ofbribing officials in their own countries haveseen nothing wrong with bribery whenoperating abroad. However, this practice hasbecome increasingly unacceptable and therehave been initiatives to make the privatesector commit to a more transparent andhonest global business environment.

Some companies, following a number ofcorporate corruption scandals, and recogniz-ing the public relations value of a clean image,have been developing comprehensive codes ofconduct, conducting anti-corruption trainingand establishing internal control systems.Others have been less scrupulous. In HongKong (SAR), China a survey in 2006 foundthat 76 per cent of international companiesbelieved that they had failed to win new busi-ness in the previous five years because a com-petitor had paid a bribe.70

While many TNCs have developed theirown codes of conduct, a number of interna-tional agencies and civil society organizationshave also set up guidelines to encourage TNCcommitment to a corruption-free businessenvironment. One of the most important mea-sures is the OECD Convention on CombatingBribery of Foreign Public Officials in Interna-tional Business Transactions – further deve-loped at the global level by the United NationsConvention Against Corruption.

This has spurred other internationalinitiatives such as the UN’s Global Compactframework. The latter is a voluntary initia-tive for businesses which are committed toaligning their operations and strategies withten universally accepted principles in theareas of human rights, labour, the environ-ment and corruption. Principle 10 reads:‘Businesses should work against corruptionin all its forms, including extortion andbribery.’ The Global Compact has so far en-listed over 2,900 businesses in 100 countriesto promote socially responsible policies in theanti-corruption area.71

Civil society organizations have also beenvery active in creating awareness of TNC

initiatives there are comprehensive frameworks for monitor-ing and evaluation involving a variety of stakeholders fromgovernments to civil society, led by the Pacific Plan ActionCommittee. Importantly, many of these new governance struc-tures will explicitly include issues pertaining to resource man-agement, perceived in the Pacific as an extremely ‘wet’ sectorfor corruption. Underscoring all these reforms is the harmoni-zation of traditional and introduced governance systems;corruption is said to occur in the grey area between the two.

Since many Pacific Island countries are very small and havelimited capacity, rather than having national anti-corruptionagencies, there could be a regional body to respond to thespecial needs of such countries and promote effectiveeconomic integration and collective security.

Source: Pacific Islands Forum Secretariat. n.d.


The proceeds ofcorruption are

laundered throughoffshore banks and

held in secretaccounts in tax

havens

activities, exposing their misdeeds and lobby-ing for legislation and initiatives to hold themaccountable for their activities overseas. Oneexample is Transparency International’s‘Business Principles for Countering Bribery’– developed in partnership with companies,academia, trade unions and non-governmen-tal bodies. International financial institutionssuch as the World Bank are beginning to takeon an anti-corruption regulatory role whentheir own financing is involved, by investigat-ing and sanctioning companies.

TTTTTax Havax Havax Havax Havax Havens and Money Launderingens and Money Launderingens and Money Launderingens and Money Launderingens and Money Laundering

For developing countries, one of the mainproblems in prosecuting and punishingcorrupt officials and businesses is that theproceeds of corruption are laundered throughoffshore banks and held in secret accounts intax havens, concealing the dishonest andillegally obtained money and making it hardto track down assets looted by corruptleaders.

A number of NGOs, like the Tax JusticeNetwork, have lobbied to bring these issues tothe discussion table, and governments andinternational development agencies are nowstarting to respond. In 1989, for example, theG7 founded a Financial Action Task Force onMoney Laundering (FATF) which has listed40 anti-money laundering measures that havebeen accepted internationally as policy bench-marks. The members of FATF in Asia andthe Pacific are Australia, China, Japan andSingapore,72 which have committed toundergo the required mutual evaluation toassess the extent of implementation of the 40recommendations. Other countries in theregion that are not FATF members have alsobeen evaluated through an associate of FATF:the Asia-Pacific Group on Money Laundering.

Much laundered money ends up in taxhavens. Levying minimal taxes, or none at all,

these attract funds from depositors who haveacquired them illegally. Dirty money associ-ated with bribes received by public officialsfrom developing and transition countries andhidden in tax havens has been estimated at$20 to $40 billion per year.73 A UNODC/World Bank report says that offshore financ-ing is thought to have provided a shelter formore than $600 million in misappropriatedfunds by former Philippines PresidentFerdinand Marcos.74

Globally, tax havens or harmful preferen-tial tax regimes have facilitated potential forcross-border corruption. While many of themare promoted and protected by developedcountries, Asia-Pacific is also home to a sub-stantial number. Major ones identified world-wide in 2000 were 71 in number, including21 from OECD member countries and 13from the Asia Pacific; in 2007 these havecome down to 39 overall of which one isamong the OECD members and 6 are in AsiaPacific, the later being all islands.75 InSingapore, foreigners have been allowed toacquire residency through investment. Astudy, noted that in 2006, roughly “18,000‘high-net-worth individuals’ of Indonesianorigin resided in Singapore and held approxi-mately US$ 87 billion in financial wealth”.76

Indonesian Government officials have beencritical of the lack of cooperation from theirSingaporean counterparts when it comes toanti-money laundering and extradition offugitives. Singapore’s Prevention of MoneyLaundering Act of 2002 ensures robust inter-nal regulations, partly through the inclusionof the ‘Know Your Customer’ initiative whichrequires financial institutions to reportsuspicious transactions to the authorities.However, currently the scheme only appliesto transactions linked to serious crime orterrorism. Revenues derived from illegallogging or other environmental crimes appearto fall outside its scope.77


Corruption is suchan insidious andpervasivephenomenon that ithas to be tackled atmany levelssimultaneously

Tax havens are an issue that has to beaddressed through global cooperation. Thereis little point in closing down existing taxhavens if they are replaced by new ones.

As a response to this, and to helpdeveloping nations recover assets stolen bycorrupt leaders, UNODC and the World Bankin 2007 launched the Stolen Asset Recovery(StAR) initiative. This will give developingcountries financial and technical assistance tostrengthen their institutional capacity toretrieve stolen funds and invest them indevelopment programmes – and to monitortheir use to ensure that they are not stolen asecond time. It will also help countries bringtheir laws into compliance with the UNConvention Against Corruption.

StAR emphasizes the need for developedand developing countries to work in tandem.While such money frequently originates indeveloping countries, much of it is beinghidden in developed countries. Developingcountries need to strengthen their publicinstitutions; at the same time developedcountries must demonstrate stronger politicalwill and carry out the necessary legal reformsbacked up with consistent investigation.78 Bythe end of 2007, Switzerland, one countryknown for its secretive banks, had signed onto the StAR initiative, hopefully making itincreasingly difficulty for corrupt money tofind a safe hiding place.

As a part of the initiative, UNODC andthe World Bank appealed for all countries toratify and implement the UN ConventionAgainst Corruption (UNCAC), which onlyfive of the Group of Eight developed countrieshave done. Among the countries earlier seenas tax havens in Asia-Pacific, the Maldivesacceded to UNCAC in March 2007. Chinaratified in January 2006; the agreement willbe applicable also for Macao and Hong Kong.Singapore is a signatory to UNCAC but hasyet to ratify the agreement.

GovGovGovGovGovernments Ternments Ternments Ternments Ternments Taking the Leadaking the Leadaking the Leadaking the Leadaking the Lead

Corruption is such an insidious and pervasivephenomenon that it has to be tackled at manylevels simultaneously. But one thing is clear –governments have to set an example and takethe lead. They need take a determined stand,enacting the necessary legislation, launchingeffective institutions to investigate corruptionand root it out. A number of governmentshave put together some of the requiredingredients: anti-corruption agencies, right toinformation legislation, e-governance andgreater international cooperation, but moststill have a long way to go. However actionfrom the top is only a part of the picture.This needs to be reinforced by pressurefrom below, which is the subject of thenext chapter.

Corruption is injustice, silence is consent.SLOGAN AT A PUBLIC HEARING, INDIA

For devil’s sake, don’t give bribes.MOTHER TERESA

CHAPTER 7: CITIZENS ON WA CITIZENS ON WA CITIZENS ON WA CITIZENS ON WA CITIZENS ON WATCHTCHTCHTCHTCH 131131131131131


Citizens on WCitizens on WCitizens on WCitizens on WCitizens on Watchatchatchatchatch 77777

Across the regionmany individuals

and groups areincreasingly

becoming lesstolerant of

corruption and thedamage that it

causes, and aretaking direct action

Corruption is often seen as an inevitable factof life in countries where systems ofgovernance are still developing, governmentcontrols are weak and ill-paid civil servantscan be expected to try to supplement theirpay. Across the region many individuals andgroups are increasingly becoming lesstolerant of corruption and the damage that itcauses, and are taking direct action.

The Power of the MediaThe Power of the MediaThe Power of the MediaThe Power of the MediaThe Power of the Media

One of the principal watch groups monitor-ing and exposing corruption is the media –press, radio, TV and increasingly theinternet. They can serve many importantfunctions, beyond just exposing corruption.The media can sustain an open and trans-parent flow of information, fostering aclimate of opinion that is increasinglyintolerant of corruption.

The most dramatic cases of media inter-vention occur when investigative journalistsexpose cases of grand corruption – leading toprosecution, or at least the resignation ofhigh-profile offenders. This has been seenin many Asia-Pacific countries. In thePhilippines, for example, investigative report-ing provided evidence that led to the impeach-ment of political leaders. The investigationsbrought out instances of tax kickbacks andbribes.

Tackling corruption is not a job for governments alone. Civil society must play its part – bymonitoring and reporting on standards of government and also by refusing to pay bribes orcollude with corrupt officials. Individuals, civil society organizations and the media all need tostay alert, demanding the highest ethical standards and resolving to reject corruption whereverit appears.

There have also been high-profile cases inIndia. In 2001, for example, journalists fromthe website tehelka.com wrote about large-scale corruption in defence procurement. Thiseventually led to the resignation of the defenceminister. Posing as representatives of a largemilitary supplier, journalists approachedleaders of the ruling party and members ofthe army’s top brass, showing that they werewilling to accept bribes in the billions ofrupees. This demonstrated what people hadlong suspected: that defence and armyofficials were skimming huge amounts frommilitary contracts. This exposé shook theIndian political and defence establishments.The tehelka.com journalists suffered someharassment and their website was forced toshut down, but they have now reappearedproducing a high-quality weekly paper.1

Journalists in China too have exposedlow- and mid-level corruption, contributing tothe removal of local officials from office,often with the tacit endorsement of highergovernment officials. In 2005, for example,Xinhua (the official news agency) publicizedthe results of a government audit showingthat $1 billion meant for infrastructureprojects and public compensation in the poor,north-western province of Gansu had beendiverted or embezzled. More than 40 officerswere caught, including a vice-mayor of aneastern city who was jailed for taking bribes.2


As well asexposing individualcases, investigativeexposure can leadto more profoundreforms

was revised, increasing the controls on indi-vidual contributions. If any campaign workeris found to have broken the rules, the electionresult can be overturned.5 Similarly, in theRepublic of Korea, the Government ofPresident Kim Dae Jung, in 1999, respondedto a popular clamour for election reforms byimposing ceilings on contributions to politicalparties by individuals and companies andestablishing annual subsidies for politicalparties.6

Exposure on the InternetExposure on the InternetExposure on the InternetExposure on the InternetExposure on the Internet

Those with vital information on corruptioncan now use the internet, regardless of howconstrained the press is. During the 2000election campaign in the Republic of Korea acoalition of 600 grass roots organizations hadfound that 15 per cent of the candidates forparliament had serious criminal records andmany others were guilty of tax evasion ordodging the draft. They published the namesof blacklisted candidates on a website. Thewebsite got 1.1 million hits on election dayand of 86 blacklisted candidates, 58 lost.7

Why did the newspapers not take the initia-tive? For three decades the country was in thegrip of dictatorship and despite today’sdemocracy, the mainstream media aregenerally timid.8 In this case, the web servedas a virtual ‘town square’ where people coulddiscuss and debate, forcing the traditionalmedia to follow suit.

Similarly, in China, blogs, of which therewere as many as 33 million by the end of2006,9 have led to a rise in public discussionon corruption. One blog by an independentjournalist has exposed corruption, includingthe case of a local official who stole$400,000.10

In the Philippines, in the heat of the massprotests against a former president, theinternet was a hive of activity for Filipino

The Party eventually launched an investi-gation of the erring officials, with mediapublicity providing legitimacy and generatingpublic support for the probe. Such tacitendorsement of exposés of corruption hasencouraged ground-breaking journalisticinvestigations. In 2002, a journalist probedcorruption in the securities market inLanzhou – the capital of Gansu. His reportsresulted in the closure of over 400 illegalcompanies by the government. But the jour-nalist also received death threats as a result,including one from a businessman whoseillegal practices he exposed. Gansu officialsbanned his reports, saying these contributedto instability in the province, prompting himeventually to move to Beijing.3

Press publicity can be particularly effec-tive against two especially pernicious types ofcorruption. The first is extortive corruptionin which a government official demands abribe to provide a service. Victims tend toreport this type of corruption to the press.The second type of corruption that the presscan expose is collusion between bureaucratsand their clients. In this case, neither has anyincentive to expose malfeasance, but journa-lists do, motivated either by their professionalethos or the prospect of a good story.4

As well as exposing individual cases,investigative exposure can lead to moreprofound reforms. The uncovering of serioussystemic flaws can catalyse public discussionand debate, ultimately leading to an overhaulof structures and systems. In many democra-cies the exposure of corruption in electoralfund-raising, for example, has generatedlively public discussions and in some caseshas led to greater restrictions on campaignfinance. In Japan, for instance, scandalslinked to campaign contributions in the1990s led to new laws designed to limit theinfluence of corporate money in elections. In1999, the Political Fund Control Law (1948)


The press andother media will,however, only beable to report oncorruption if theyare free to do so

activists who mounted ‘cyber-rallies’ andonline signature campaigns, mobilizingstudents, the middle class and also overseasFilipinos.

In India, one woman set up a blog toprotect her husband – a whistle-blower work-ing in the civil service of the State ofKarnataka. Her husband had reported on col-leagues who were supplementing their sala-ries with bribes. He was pushed around thecivil service and forced to switch jobs seventimes in nine months. Scared by the murderof several people in India known to haveexposed corruption, his wife built a website –fightcorruption.wikidot.com – to make hiscase known to the world. ‘In the YouTube era,’she reasoned, ‘it is harder to kill a man whohas a bit of internet renown. I wanted toinform the people that this is happening, thatmy husband is a whistle-blower, so that itbecomes the responsibility of every citizen toprotect him’.11

The internet has clearly provided a rela-tively free space where individuals andgroups can articulate views and provideinformation unavailable in the mainstreammedia. But this is not an option open to mostpeople. In the rural areas and among the semi-literate in particular, few people have accessto the internet.

Press FreedomPress FreedomPress FreedomPress FreedomPress Freedom

As Amartya Sen argues, the free flow ofinformation and open public discussion ‘havea critical instrumental role in preventingcorruption, financial irresponsibility andunderhand dealings’.12 The press and othermedia will, however, only be able to report oncorruption if they are free to do so. They facetwo main types of constraints. The firstcomes from governments. In some countriesin the region the press and TV are largely inthe hands of the state, so they have relatively

little freedom to act. The second comes fromproprietors; private media may appear moreindependent, but often serve the interests ofwealthy individuals or corporations who alsomay be corrupt.

A survey for this report of 28 Asia-Pacificcountries found that most had both privateand government-owned media. For example,71 per cent of the countries in South Asiahave both private and government-ownednewspapers (Table 7.1). The other 29 per centof countries have only privately-owned ones.But in East Asia and in the Pacific 30 per centand 36 per cent of the countries, respectively,report only government-owned newspapers.

Most countries in South Asia alsoreported both government and private owner-ship of radio stations, television channels andinternet websites. But in the Pacific, govern-ment-owned radio stations are reported by 55per cent of countries and television channels62 per cent. In East Asia, the figures are 30per cent and 20 per cent respectively.

TABLE 7.1MEDIA OWNERSHIP – PERCENTAGE OF COUNTRIES

Newspaper Radio Television Internetownership station channel site

ownership ownership ownership

East Asia

Government only 30 30 20 0Private only 40 10 10 30Govt. + private* 30 60 70 70

South Asia


Pacific


Notes: This is based on a sample of 28 countries: 7 in East Asia; 11 in the Pacific;10 in South Asia. * Govt. + private indicates both options are available.

Source: Governance focal points in UNDP country offices.


An indication of the extent of pressfreedom can be gathered from the ratings ofindependent organizations, such as Reporterswithout Borders – an NGO which compilesan annual index of press freedom based on50 criteria. This represents the views ofjournalists, researchers, jurists and humanrights activists and is compiled with theassistance of the Statistics Institute of theUniversity of Paris. The 2007 index rated 169countries, of which the top 10 were all

Some journalistslack the skills fortextured and in-depth reporting

TABLE 7.2WORLDWIDE PRESS FREEDOM INDEX,

ASIA-PACIFIC COUNTRIES, 2007

Ranking Score

New Zealand 15 4.2Australia 28 8.8Japan 37 11.8Republic of Korea 39 12.1Hong Kong, China (SAR) 61 20.0Mongolia 74 23.4Cambodia 85 25.3Timor-Leste 94 27.0Indonesia 100 30.5Fiji 107 33.5Bhutan 116 37.2Tonga 119 38.3India 120 39.3Malaysia 124 41.0Philippines 128 44.8Maldives 129 45.2Bangladesh 134 53.2Thailand 135 53.5Nepal 137 53.8Singapore 141 56.0Afghanistan 142 56.5Pakistan 152 64.8Sri Lanka 156 67.5Lao PDR 161 75.0Viet Nam 162 79.3China 163 89.0Myanmar 164 93.8Iran 166 96.5DPR Korea 168 108.8

Note: The index for 2007 is based on events that took place between 1 September2006 and 1 September 2007.

Source: Reporters without Borders, 2007.

European. The highest rated Asia-Pacificcountries were New Zealand the at 15th,followed by Australia at 28th (Table 7.2)position.

It should be emphasized that this index isconcerned with freedom and does not judgequality. A free press may, for example,concentrate less on news and more onentertainment. Nor does it say whether themedia report responsibly; rather thanpromoting a reasoned debate and consensusthe press may simply exploit its freedom bypeddling sensationalism or fomentingcynicism and conflict.

There can also be constraints on capacity.Some journalists lack the skills for texturedand in-depth reporting. As a result, the mostsuccessful investigative reports tend to bethose that focus on individual wrongdoing, onstories with clear villains, rather than onmore complex issues linked with socialinequality, injustice, harmful public policy, orunaccountable social and political structures.

In practice, does a free press contribute tothe reduction of corruption? The picture ismixed. For one thing, the restrictions cancome from different directions. Those incountries towards the bottom of the list tendto come from strong government control. Thisis the case of Myanmar, for example. And inSingapore a muzzled press, fearing restrictivedefamation laws and breaches of officialsecrets, practices considerable self censor-ship. In any case, nearly all of Singapore’smedia outlets, including internet serviceproviders, are run by companies with closeties to the ruling party.

In the Philippines the restrictions canalso come from other directions. ThePhilippines has a liberal access-to-informationregime and an energetic and crusading mediabut has a low rating from Reporters WithoutBorders because of the murder of a numberof journalists.


Freedom has to bebalanced by

responsibility,without which

credibility can beseriously

compromised

These countries also have very differentexperiences with corruption. In Singapore,for example, corruption is low largely becausea highly efficient government controls thesystem from the top, punishing offendersseverely and by paying bureaucrats quite well.The Philippines, on the other hand, despite alively press which has exposed the corruptionof a number of presidents and high-rankinggovernment officials, is thought to have highlevels of corruption. After a former politicalleader threatened tax audits and othergovernment sanctions against the owners ofcritical media outlets, they toned down theirreporting on the corruption and otherwrongdoing of his administration.13

Other countries in the region have asimilar combination. India has one of theregion’s longest traditions of press freedomyet corruption remains rife. Indonesia too,especially since the fall of Suharto, has seen aproliferation of new newspapers. Yet it is stillperceived to be one of the more corruptcountries in the region.

Clearly a free press is not enough. Whatthese countries need in addition are clean andefficient systems of justice that will follow upon widely-reported allegations. Neverthelessit would be wrong to say the media in thesecountries has been completely ineffective. InIndia, Indonesia and the Philippines, mediareporting has helped create public pressurefor reform, even if this has been slow tomaterialize. It could also be argued thatwithout a free press the situation in thesecountries would have been far worse. Ofcourse freedom has to be balanced byresponsibility, without which credibility canbe seriously compromised.14

A free press could further improve thesituation in Singapore. The country controlscorruption at home but has had less successcontrolling the behaviour of its government-owned enterprises overseas. With even greater

freedom, the Singaporean press could exposesuch activities and make state entities moretransparent and accountable. The countrywould also benefit from more criticalreporting on the perks of high-level officials,their transactions and decisions.

Ethical Standards of JournalismEthical Standards of JournalismEthical Standards of JournalismEthical Standards of JournalismEthical Standards of Journalism

Even if the press is free, its ability to combatcorruption can be compromised by low ethicalstandards. In many countries journalists areonly too willing to accept payments fromthose on whom they are covering. In 2001,the Alliance of Independent Journalists inIndonesia surveyed hundreds of reportersand found that 70 per cent of those in EastJava and 97 per cent in Jakarta were takingenvelopes of cash from their news sources.15

The Jakarta office of the Southeast AsianPress Alliance also reported that 64 state-owned firms and government departmentsset aside $173 million for ‘cultivatingjournalists’ in 2001 (Box 7.1). Similarly thePhilippine Centre for Investigative Journalismin 1998 polled 100 beat reporters in MetroManila and found that 71 had been offeredmoney by their sources. Of these, 24 admittedthey took the money, with 16 keeping the cashfor themselves and 8 turning it over to theireditors.16

Enabling the Media to Expose CorruptionEnabling the Media to Expose CorruptionEnabling the Media to Expose CorruptionEnabling the Media to Expose CorruptionEnabling the Media to Expose Corruption

The media can promote good governance ifthey retain editorial independence, abide byhigh ethical and professional standards andknow that their rights will be guaranteed.They are also more likely to exposecorruption if their ownership is dispersed ina competitive market and they represent adiverse range of views.

They must also be free of intimidation.Governments should not unduly penalize


BOX 7.1AN ENVELOPE HEADACHE IN INDONESIA AND ATM JOURNALISM IN THE PHILIPPINES

In Indonesia the practice of giving out cash-filled envelopesdates back to the 1950s (previously, friendly journalists weregiven rice). In the aftermath of the 1997 crash of the rupiah,the practice became so endemic that members of the publicwith fake press cards made a living from going to pressconferences and accepting envelopes. Such people were knownas ‘bodrex’ – an Indonesian brand of headache tablet.

The persistence of ‘envelopmental journalism’ is oftenattributed to the generally low salaries journalists receive.Indonesian journalists earn less than $200 a month, making iteasier to tempt them with cash gifts. Editors and publishersshare the blame, since they could correct the problem byraising benefits and disciplining erring staff.

Few media organizations have an in-house code of ethicsabout receiving the envelopes, although publications such asBisnis Indonesia, Kompas, The Jakarta Post and Tempo

Citizens need to beable to interpret themedia critically anddistinguish goodjournalism from bad

corruption activities. Pro Public says its radioprogrammes have created over 5,500 GoodGovernance Radio Clubs with 53,000members – largely educated adults who aresensitive to social concerns.17 Clubs are ofthree types: those that are general, those thatare women-led, and those involvingmarginalized groups. Their activities includepublishing, raising awareness, visiting localauthorities to discuss corruption issues,monitoring local governments and reportingcases of corruption to the Commission for theAbuse of Authority (CIAA).

Refusing envelopes in Indonesia. Journalist-ledcampaigns to combat corruption within themedia have had some success. The Allianceof Independent Journalists began an ‘anti-envelope’ campaign in 2000 to raise aware-ness of the problem and its pernicious impact.The organization has also lobbied for higherwages for journalists. The anti-envelopecampaigns were in the form of posters,research, pamphlets and in-house education.

Fem’Link in Fiji. Fem’Link is an NGO whichbroadcasts its regular FemTALK series ofcommunity discussions using mobile radio

those who reveal ‘state secrets’ nor compeljournalists to reveal their sources. Inaddition, they need to ensure that laws onlibel and defamation are not so restrictivethat they prevent reporting on issues relatedto corruption. There is always the risk ofmedia excesses, but these are best controlledthrough independent press councils, media-watch groups, ombudsmen and other bodiesindependent of government.

At the same time, citizens need to be ableto interpret the media critically and distin-guish good journalism from bad. The press ismore likely do its job well if the publicdemands it. This awareness can be fosteredin schools, for example, by teaching medialiteracy. Media organizations should also bemore transparent about their ownership,editorial decision-making processes as well asthe pressures and restraints on their reporting.

Across the region there have been anumber of examples of ways in which themedia have helped combat corruption.

Community media in Nepal. The Civil SocietyAnti-corruption Project run by the NGO ProPublic uses local radio listener clubs and othercivil society organizations to encourage anti-

magazine have a programme whereby money is receivedgraciously and then given to charities. Bisnis Indonesiapublishes a monthly list of the amounts journalists havereceived in envelopes. When journalists’ names are conspicu-ously absent from the list, colleagues can guess they havekept the envelope rather than handing it to the officesecretary.

Moving along the technological ladder, in the Philippinesin the 1990s, ‘envelopmental journalism’, which took place inthe 1970s and 1980s, has been replaced by ‘ATM journalism’.Reporters can now receive discreet and regular pay-offsthrough their automated teller machine (ATM) accounts.Often, the accounts are in the names of relatives, rather thanof the reporters themselves.

Sources: Coronel 2002; Florentino-Hofilena 2004; Perry 2002.


and television equipment, including a low-power FM radio transmitter that can becarried from village to village. It aims to createa ‘safe space’ to encourage women to discussand build awareness of common problems.Corruption is a recurring theme because ithits women particularly hard as a result oftheir economic and political vulnerability andthe adverse effects of corruption in govern-ment services.

A hotline in Papua New Guinea. TransparencyInternational Papua New Guinea, theOmbudsman Commission and the MediaCouncil run a hotline through which membersof the public can report suspected cases ofcorruption directly to the media.18 A taskforce of senior journalists has been appointedto investigate public complaints which ifverified are published in the press. The mediacouncil has built an extensive network ofcommunity groups. Besides reducing thescope for intimidation and harassment themedia council network is a source of supportfor whistle-blowers.

Radio station 68H in Indonesia. When the lastindependent magazine in Indonesia wasclosed down in the late 1990s, a group ofjournalists formed the independent radiostation 68H to give uncensored news. Evenafter the restoration of democracy it conti-nues to broadcast and undertakes publicservice campaigns in partnership with rele-vant Indonesian organizations.19 It hasreported on a number of corruption issues,including the diversion of funds duringrehabilitation of tsunami-affected areas, aschool rehabilitation project in South-EastSulawesi and certain alleged business mal-practices in North Sulawesi and Acehprovince.20

Covering corruption across the region. In 2007the United Nations Development Programme

formed a partnership with the private sector,including the Siam Cement Group andPricewaterhouseCoopers, to train journalistsacross the region on how to cover corruptionstories and understand basic ethics ofbalanced reporting. More than 45 reportersfrom 11 countries in Asia and the Pacific havetaken part in workshops that have allowedthem to work through potential corruptionstories. Journalists from Bangladesh,Cambodia, China, Fiji, Indonesia, Lao PDR,the Philippines, Sri Lanka, Thailand, Timor-Leste and Viet Nam have shared theirexperiences.

Even when the media itself is notlaunching investigations it can still play a vitalrole through its normal reporting functions.Thus if it reports regularly on the activities ofpublic anti-corruption bodies, it serves toreinforce their position and dissuade publicofficials, who might otherwise meddle in theirwork. By persistently snapping at the heels ofpublic officials and keeping an eye onbusinesses, a lively press helps sustain ademocratic system and discourages thosetempted to engage in corrupt practices.

Civil Society OrganizationsCivil Society OrganizationsCivil Society OrganizationsCivil Society OrganizationsCivil Society Organizations

While media can prepare the ground work,accountable government has to be sustainedby citizens themselves, through the ballot boxand by acting through civil society organiza-tions (CSOs). These are self-organizingautonomous groups, such as trade unions orreligious groups, that operate in the realmbetween the household and the state, helpingcitizens to forge shared values, build trust,and engage in cooperative activity. They canalso enable citizens to check abuses of powerby government.

Corruption control would seem to be acompelling CSO cause. In practice, however,such collective activity is vulnerable to the‘free-rider’ problem. When everyone stands

Corruption is arecurring themebecause it hits

women particularlyhard as a result oftheir economic and

politicalvulnerability


SPECIAL CONTRIBUTION – FIGHTING CORRUPTION IN INDONESIA: FROM WHERE?

By Teten Masduki

Likewise, the Judicial Commission,Attorney’s Office and police face realobstacles in carrying out their oversightfunctions.

In general, the Indonesian commu-nity has not truly experienced living ina democratic culture, which was onlyreintroduced after being absent for along time. Since the 1999 election, aregional autonomy policy has beenintended to reduce the centralization ofpower in national authorities, whowere prone to an oligarchic abuse ofpower. But as implemented, this policyhas ended up distributing practices ofabuse of power to the regions, openingaccess for local elites and politicians toregional resources susceptible tomanipulation. Local budgets have beenallocated more to serve officials’ interestsrather than to improve public services.Meanwhile, the business community hasbeen burdened by ordinances enacted bylocal governments in efforts to increaseregional revenues, which leads to ahigh-cost economy. Thus, the will tochange from within the Government isbarely there.

At the same time, there has beenlittle democratization process to open upopportunities for public participation inlocal governance. Checks and balancespractically do not work, not only becauseof collusion with local government, butalso insufficient control by the publicbecause civil society remains relativelyweak. Given the continuing worrisomecombination of State capture and pettyor bureaucratic corruption, however,anti-corruption reform must be pushedby civil society, the private sector andthe media – a condition that the nationalanti-corruption programme overlooks.Each must be mobilized to increaseexternal needs for economic and politicalreform.

Still, an anti-corruption socialmovement is burgeoning, even if it doesnot yet have a strong enough foundationto make a significant difference. Theextraordinary growth of free speech andfree media since the start of the newdemocratic era has made major inroadstoward this expansion. Internationaldonors should channel increased fundsto strengthen human resources and

capacity of community institutions.Domestic philanthropy, still nascent, isunlikely and moreover, may not be agood idea as there could be a clash ofinterests with many objectives of thesocial movement.

Proposals for enlargement ofcommunity participation in the oversightof corruption must be given strongersupport by the Government andlegislative branch, which have been veryslow to move.23 The spirit to fightagainst corruption that is growingwithin the community is facing apowerful elite that is extremely corruptand prefers the status quo. To be sure,the conspiracy of the elite is not aphenomenon exclusive to Indonesia.This also takes place in developedcountries, as shown by various electoralfinancing scandals. In Indonesia,however, the influence of the elite ishuge, and could paralyse almost theentire democratic system. This must bevigorously countered by a grand coalitionbetween government and non-government reform forces in order toovercome obstacles still posed by thebureaucracy and formal politics.

Business and political conspiracy,which flourished under the kleptocracyand managed to control almost allnational economic resources, iscurrently seeking a new relationshipthat fits in with the newly fragmentedpolitical landscape. One tycoon complainsthat channelling funds to a number ofinfluential, political powers is no longersufficient to secure business protection.And this offers hope for the future;bribing what has been termed the‘roving bandit’ may begin to be nolonger so effective, when corrupt actorsand centres are spread out and nolonger monolithic, while policymakingis no longer centralized. When corrup-tion loses its benefits, it will shrink.Having a stronger civil society andprivate sector can hasten that day inIndonesia.

Teten Masduki is an anti-corruption iconin Indonesia. Since 1998 he has been headof the Indonesia Corruption Watch (ICW).In 2005, he received the 2005 RamonMagsaysay Award for public service.

Getting out of the trap of corruption isnot easy. This is particularly so in thecase of Indonesia, which suffered frommore than three decades of kleptocraticrule that still retains a strong grip onthe Government and business. In thepaternalistic culture of Indonesiansociety, I witness that corruption tricklesfrom the top down.

Yet even since the advent of demo-cracy in the country, neither global anti-corruption programmes implemented inIndonesia, nor tens of millions of dollarsin international aid, nor domestic effortshave motivated civil society, businessand Government to jointly fight corrup-tion. A 2007 Governance AssessmentSurvey conducted in 10 provinces and 10districts concluded that illegal chargesare still common and corruption eradica-tion is hindered by the lack of seriousattention from government and non-government institutions alike. There-fore, it is time to rethink our ways tofight corruption. Are they relevant tothe issues in Indonesia?

Most anti-corruption programmes inthe country target the strengthening ofgovernment institutions, starting fromthe establishment of new institutions tothe managerial reform of existing ones.This may arise from the largely govern-ment-to-government funding for goodgovernance programmes. But this setsaside the strengthening of social institu-tions and expansion of public participa-tion channels. In this case, corruptionseems to be regarded as a managerialproblem or failure of government –judiciary, bureaucracy, fiscal systems,parliament – instead of as a result ofimbalanced relations among the State,society and business.

Nothing is wrong with the objectivesof reforming government institutions.However, with policymakers who havelow political will and limited ownershipof a reform agenda, this approach facesa huge challenge in implementation andhas led to democratic corruption. Effortsto undermine new anti-corruptioninstitutions in Indonesia, such as KPKand the corruption court, have beencontinuous,21 which can be viewed asan expression of resistance from thosewhose interests are being disturbed.22


As NGOs andCSOs become more

attractive channelsfor aid, careful

scrutiny will berequired to

distinguish thewell-run and

effective, from theinept or corrupt

to benefit from the actions of one individualor organization, then few will feel compelledto do the ‘heavy lifting’ themselves, especiallygiven the risks inherent in confronting thepowerful and privileged who may resort toviolence. Moreover, CSOs, being products ofthe milieu in which they live and operate, canthemselves be corrupt. In some countries‘letter-head’ NGOs regularly spring up justto take advantage of the availability ofdonor funds.

When considering NGOs, it is importantto distinguish between independent NGOsfrom government-sponsored organizations,sometimes known as GONGOS, that rely onfunds from governments from which theytake their agendas. Some of these are genuineallies in the struggle for corruption control,while others are less benign or even sinister –often lobbying at the United Nations andother international institutions on behalf ofthe repressive regimes that fund them.

Care needs to be taken to ensure not justthat CSOs are genuine, but that they them-selves remain uncorrupted. Even reputablegroups may claim to speak for certain consti-tuencies while having little or no genuinelegitimacy to do so.24 In many countries,including mature democracies, some anti-corruption groups, ‘civic foundations’ andpseudo-charities have become smokescreensfor corrupt or borderline political dealings.With regard to micro-finance activities, a lackof transparency can facilitate corrupttransactions. Many micro-finance institutionsdo not maintain transparency in financialdisclosure; unlike organizations like GrameenBank in Bangladesh and Spandana in India.25

As NGOs and CSOs become more attractivechannels for aid, careful scrutiny will berequired to distinguish the well-run andeffective, from the inept or corrupt.

CSOs may find it very hard work ifcombating corruption is their sole objective.

Instead it is better to have more CSOs thatsee controlling corruption as an importantcontribution to their overall objectives. Thosemay be improving health, other services, orcreating income-generation activities for thepoor. Ideally, there should be a broad coalitionof CSOs that might share some public valuesbut are sustained by diverse incentives andappeals. Attempts to jump-start a networkof CSOs which are aimed only at tacklingcorruption may not produce sustainableresults, and may even waste scarce resourcesand political opportunities.

How Can CSOs Help Check Corruption?How Can CSOs Help Check Corruption?How Can CSOs Help Check Corruption?How Can CSOs Help Check Corruption?How Can CSOs Help Check Corruption?

CSOs in the Asia-Pacific region that want tocounter corruption can face a number ofobstacles. In some countries, particularly inEast Asia, CSOs face quite a hostile environ-ment; they have limited resources and manyof their members – often, those harmed mostby corruption – are preoccupied with basicsurvival. Tackling corruption means mobiliz-ing the weak against the strong – and with-standing the reactions of powerful people andentrenched interests, many of whom go togreat lengths to protect their corruptadvantages.

As a result, CSOs may make little head-way in poor and highly corrupt countries.CSOs might in principle help such countriesimprove social conditions, support bettergovernance and contain corruption; but inthese countries it is also difficult for CSOs totake root and survive. CSO action againstcorruption is thus unlikely to bear fruit inpoor, undemocratic societies; indeed it ismore likely to result in risk, repression andapathy.

CSOs work best when they have materialresources and the liberty to influence those inpower. In Thailand after 1992, for example,civil society organizations put themselves in


Civil society groupscan monitor govern-ment activities andensure that policiesare carried out

strategic positions and became involved inmonitoring political activities. Theyparticipated in poll-watch activities duringelections and advocated for social andpolitical reform.26

Civil society groups sustained by a freeflow of information can monitor governmentactivities and ensure that policies are carriedout thereby fostering accountability andcontributing to better governance, especiallyin developing countries.27 But it is importantto recognize their limitations, however, andappreciate what CSOs cannot and can do(Box 7.2).

In poorer societies CSOs are more likelyto check corruption indirectly via their long-term contributions to human development.Indeed, the CSOs most valuable in a struggle

against corruption might have origins,agendas and incentive systems that havenothing to do with good governance or publiclife, but still teach organizational skills, buildsocial networks and mutual trust, creating asense of efficacy. The more diverse the rangeof groups active in civil society, the more theywill be able to stimulate citizen activity acrossa whole range of concerns.

Incentives for ParticipationIncentives for ParticipationIncentives for ParticipationIncentives for ParticipationIncentives for Participation

Even groups oriented primarily toward publicgoals must offer incentives to individualsupporters. Those appeals might seem todetract from the idealism and purity ofreform, but in fact can be essential tosustaining it over time. James Q. Wilson

BOX 7.2WHAT CIVIL SOCIETY ORGANIZATIONS CANNOT DO – AND CAN DO

invaluable, building trust over time.• Reinforce shared values. CSOs that draw upon existing val-

ues are more likely to be effective than those teachingnew ones, though the latter also may be necessary.

• Teach and diffuse organizational skills. People active inCSOs learn new ways to cooperate and organize activities,and what appeals and incentives work in their communi-ties.

• Offer diverse incentives to sustain participation. CSOs mustappeal to diverse motivations – self-interest, sociability, thewish for recognition and prestige, as well as pursuing long-term public goals.

• Foster the growth of local leadership. Over time CSOs createcommunity leaders with skills, credible personal reputa-tions and extensive, rooted social networks.

• Enable citizens to take advantage of political opportunities.Citizens with an organizational base, whatever its imme-diate sources and agendas, will be better able to act.

• Spread risks more widely. Fighting corruption means oppos-ing the powerful – at times a very risky business.

• Link citizens to sources of international support. CSOs mayhave international affiliates, and can be effective partnersfor international assistance organizations.

• Provide visible examples of honest, accountable leadership.CSO leaders can show by example that good governance isa real possibility.

• Promote human development. All of these accomplishmentswill promote and deepen development and thereby helpbuild a society’s anti-corruption strength.

Civil society organizations can make a valuable contributionto the struggle against corruption. But they work best withina broader agenda.

What CSOs cannot do:

• Solve all problems. CSOs cannot be merely inserted into asociety and be expected to solve all problems; they need anactive base of citizen support, resources and opportunitiesfor action.

• Operate in a vacuum. Some social, political and economicsettings are risky or unpromising for CSO activity. CSOswill succeed best where resources and a receptive regimeare in place.

• Seek only civic or reform goals. CSOs must engage with thereal needs and immediate interests of people. A whollycivic or reform-oriented agenda will encounter severe free-rider problems.

• Produce quick results. CSOs benefit society and citizens overtime, through sustained effort and support. That is all themore true for corruption issues, as they pose basic ques-tions of power and justice in both politics and the economy,tapping into basic social values.

What CSOs can do:

• Create citizen awareness of shared problems. Never underes-timate the value of showing people they are not alone.

• Build mutual trust among citizens. Repeated interactions are


Incentives shouldalso take into

account theexisting laws

offered an enduring typology of the incentivesthat motivate and reward citizen participa-tion. He identified four types: materialincentives, purposive incentives, specificsolidary incentives, and collective solidaryincentives.28 If CSOs are to engage wholly orpartly in combating corruption, how mightthese incentives apply?

Material incentives. These are rewards oftangible value, such as money or goods. Anti-corruption CSOs are unlikely to haveextensive individual material rewards, butmay be able to offer ‘exclusive materialincentives’ – things of real value, perhapscreated by the group’s own efforts, that canbe restricted to members only. Poor people’ssavings associations, for example, werefounded in difficult circumstances but stillaccumulated significant resources throughsmall individual contributions. They offeredvaluable aid – money for burials, help in thetime of emergency – on a members-only basis.Anti-corruption groups might emulate thismodel by setting up a kind of ‘corrup-tion insurance’ in which members poolinformation and small contributions, whilemaking binding pacts not to competecorruptly. Those who actively support thegroup and abide by the non-corruption pledgecould be given access to information, legaladvice and even modest amounts of cash toreduce the impact of corrupt pressures theycould not avoid.

Purposive incentives. These refer to thesatisfaction of achieving a significant goal. Infact, the most obvious incentives for an anti-corruption CSO are purposive: after all, theorganization seeks reform. Where those goalsare deeply personal, purposive incentives maybe enough, at least for a time. But as a groupgrows and matures, it will need more diverseappeals.

Specific solidary incentives. These can includeoffices, awards, honours and citations alongwith exclusive access to information. Forexample, where it is safe to do so, anti-corruption CSOs could present well-publicized ‘Corruption Fighter of the Year’awards. Some people will do a great deal toearn such recognition. Such incentives usuallycost little or nothing and help publicize thegroup as well as its honourees. This requiresan audience, so CSO incentives will beenhanced by a relatively free press.

Collective solidary incentives. These areintangible rewards created by the act ofassociating. They include the prestige ofaffiliation, sociability and fellowship, andperhaps a degree of exclusivity. This may beof particular value where civil society is weak.For leaders and members, a kind of securitycan grow out of group strength. Conversely,coalition members who lapse into corruptionhave something important to lose: member-ship of a prestigious and visible group.

Incentives should also take into accountthe existing laws. For example, Nepalese andVietnamese laws, which contain no reportingobligations with respect to corruption,provide for the offering of rewards forrelevant information, as does Pakistani law.In the Republic of Korea, rewards for reportson corruption go as high as about $160,000.29

Other types of incentive will appeal todifferent constituencies. Table 7.3 illustrateswhat an anti-corruption CSO or, better yet, agroup of them building a coalition, can offerto potential supporters.

In practice it will not always be easy todistinguish one kind of incentive fromanother. The best balance among them willdepend on available resources, the stage ofdevelopment of the CSO, the overallcorruption situation and broader social aswell as cultural factors. There can be no


disturbed by the disruptions and may wellwithdraw support and curtail access toinformation, while the corrupt ones will justbecome even more hostile. And a reform-oriented CSO getting into the business ofoffering ethical ‘seals of approval’ to leaders,parties, agencies or private interests wouldcarry its own hazards; doing so will requireformidable resources and create risks ofembarrassment, should ‘approved’ peopleand groups be revealed as corrupt. CSOs cancontribute best by concentrating on providinginformation, expertise, and sustaining a senseof strength in numbers.

Do CSOs Actually Help?Do CSOs Actually Help?Do CSOs Actually Help?Do CSOs Actually Help?Do CSOs Actually Help?

Does a strong civil society help weed outcorruption? One way to get a sense of this isto plot an index of corruption against an index

Strong andsuccessful CSOswill be better ableto sustain them-selves by using adiverse repertoireof incentives andappeals

overall master plan; strong and successfulCSOs will be better able to sustain themselvesby using a diverse repertoire of incentives andappeals.

What sort of relationship should CSOshave with local regimes: contentious orcooperative? To some extent, the answerdepends upon the political options available,and upon the state of civil liberties and ruleof law. CSOs must be forthright about oppos-ing corruption, and when possible they shouldseek cooperative relationships with theregime, giving government officials reasonsand incentives to oppose corruption, whilehelping them develop the means to do so.

Under most circumstances, CSOs shouldavoid becoming investigative bodies, whistle-blowers, or forces of anti-corruption vigi-lantes. Political leaders are unlikely towelcome this. The honest ones will be

TABLE 7.3INCENTIVES BY TYPE AND TARGET CONSTITUENCY

Material Purposive Specific solidary Collective solidaryExclusive Individual

‘Corruption insurance’ Economic benefits of an Reform as a public Data banks on corrupt Prestige, improvedimproved economy good agencies and officials image domestically

and best practices and internationally

Technical advice: vulne- Security from better Better governance. Research products Enhanced autonomyrability assessments; governance Fair political and Rewards, recognition for organization,prevention within economic processes press, oppositionorganizations; legal Stronger economic and leaders, civil societyadvice social organizations

Enhanced rule of law Sociability, fellow-ship, mutualencouragement

Prime constituencies

Small firms, domestic Citizens generally Mass membership Professional coalition of Mass membershipentrepreneurs and Civil society, NGOs NGOs staff and researchers NGO leadersinvestors

Aid/lending partners Benefactors and Journalistsfinancial supporters

Democracy groups Anti-corruption Government elitesand supporters champions

Source: Johnston and Kpundeh 2002.


Figure 7.2: Institutional and Social Capacity Compared withFigure 7.2: Institutional and Social Capacity Compared withFigure 7.2: Institutional and Social Capacity Compared withFigure 7.2: Institutional and Social Capacity Compared withFigure 7.2: Institutional and Social Capacity Compared withControl of CorruptionControl of CorruptionControl of CorruptionControl of CorruptionControl of Corruption

Sources: Esty et al. 2005; World Bank 2007b.

that represents the strength of civil society.For the corruption side, we use the WorldBank’s Control of Corruption Index (CCI).There are two useful indices for the strengthof civil society. One is also a component of theWorld Bank governance dataset, in this case,the ‘voice and accountability’ index. Basedprimarily on survey data and expertjudgements, this compares the extent towhich citizens in various countries canexpress their views freely and holdgovernments accountable. The second optioncomes from the Environmental SustainabilityIndex (ESI) – an initiative of Yale andColumbia Universities, in collaboration withthe World Economic Forum and the EuropeanCommission. This includes an indicator ofInstitutional and Social Capacity based onamong other things, the number of activeenvironment-related CSOs.

These indicators, like those forcorruption, have limitations, notably thatthey are too often based on perceptions. Still,they provide a useful starting point. With theexception of the ESI social and institutionalcapacity indicator, which was calculated onlyfor 2005, the data used here refers to 2006.How do estimates of civil society strengthrelate to the corruption rankings? Figure 7.1shows a scatter plot for values on theCorruption Control Index (CCI) and the Voiceand Accountability indices for 2006,presented for the Asia-Pacific countries forwhich data are available.

This indicates that countries with amarked tendency for stronger voice andaccountability are more effective at corrup-tion control. The slight increasing slopesuggests that the benefits may even increaseat a positive rate. The result should howeverbe treated with caution. Both variables arelikely to be influenced by other factors notmeasured here, and there is no indication ofthe direction of causality. Still, the results are

interesting because both variables originate inthe same project and reflect the samemethodology. The positive relationship couldalso result from the methods and assump-tions employed. However, it is reassuring thatmapping the CCI with the ESI Institutionaland Social Capacity measure, for thosecountries on which we have both the indicesproduces a similar result (Figure 7.2).

FFFFFigurigurigurigurigure 7.1: Ve 7.1: Ve 7.1: Ve 7.1: Ve 7.1: Voice and Accountability Plotted Agoice and Accountability Plotted Agoice and Accountability Plotted Agoice and Accountability Plotted Agoice and Accountability Plotted Against Corruption Contrainst Corruption Contrainst Corruption Contrainst Corruption Contrainst Corruption Contrololololol

Source: World Bank 2007b.


Given its underlying concept, democracyappears to play a visible role in the ESIindicator. Australia, New Zealand and Japanlie to the upper right, while Myanmaranchors the less-favourable lower-leftquadrant. On the other hand, countries suchas Bangladesh and India, which holdcompetitive elections, lie toward the lower leftof the plot or no higher than the middlingareas. This suggests that where democracy ismost effective at checking corruption it doesnot necessarily do so through the system-level‘hardware’ such as elections but through thedeeper ability to voice demands that are takenseriously by government – very much the roleof CSOs. If that is so, then effective CSOaction against corruption need not await theemergence of a fully-elaborated democraticsystem. Nevertheless, social restraintsevidently do not tell the whole story; Bhutanand Lao PDR, with similar levels ofinstitutional and social capacity, have quitedifferent levels of corruption control.

CSO Anti-Corruption Activities in theCSO Anti-Corruption Activities in theCSO Anti-Corruption Activities in theCSO Anti-Corruption Activities in theCSO Anti-Corruption Activities in theAsia-Pacific RegionAsia-Pacific RegionAsia-Pacific RegionAsia-Pacific RegionAsia-Pacific Region

The Asia-Pacific region has a variety oforganizations active in the anti-corruptionfield. Some have a global focus, others aregional base. Transparency International(TI), for example, opposes corruption aroundthe world and also has 20 local chapters inthe region. The Asia Foundation, on the otherhand, deals with corruption as part of a broadrepertoire of regional concerns. Other high-level groups deal with technical aspects ofgovernance or with human rights. Someexamples of CSO action are:

Concerned citizens in the Philippines. TheConcerned Citizens of Abra Good Govern-ment (CCAGG) is an NGO that monitorsgovernment projects in the Abra region of the

northern Philippines with the support ofUNDP. In 1987, for example, CCAGGmembers saw a newspaper advertisement bythe Ministry of Public Works and Highwaysdeclaring that it had successfully completed20 projects in Abra.30 The CCAGG memberscollected evidence which showed somethingvery different. An official government auditconcurred with the CCAGG’s findings. As aresult, 11 government officials were foundguilty of dishonesty and misconduct and weresuspended. The Chief and the Deputy ChiefEngineer of the Ministry of Public Works andHighways were also suspended without payand were debarred from serving in theprovince. Further, as a result of this case theregional director of the Ministry of PublicWork and Highways issued a directive requir-ing that projects in Abra province be fundedonly after they had obtained clearances fromCCAGG.31 Other activities include streng-thening the Northern Luzon Coalition forGood Governance and monitoring the physi-cal sustainability of projects in the region.

A zero rupee note in India. In 2007 a Chennai-based organization introduced a ‘zero rupeenote’ to assist citizens against corruption.Instead of the usual ‘I promise to pay thebearer a sum of x rupees’ pledge on a currencynote, the replica carried the pledge ‘I promiseneither to accept nor give bribes’. Because thenote was distributed across the country, thepledge was printed in the respective statelanguages and caught the imagination ofmany.32

Roadwatching in the Philippines. TheTransparency and Accountability Network(TAN), established in 1999, has around 20partner organizations or institutions. Oneproject is Government Watch, which isaffiliated with the Ateneo School ofGovernment. Among other activities, this


Source: 5th Pillar.

would report a case of corruption if they knewabout it – in order ‘to help to solve theproblem’. The most common reason for non-reporting was the ‘feeling that it was no use,no one would help’.35

Public hearings in India. The NGO, MKSS hasdeveloped a strategy, based on jan sunwai or‘public hearings’. First it obtains officialdocuments – for example, related to construc-tion records for school buildings – then itbrings people from villages where the cons-truction works were said to have taken placeand reads out the documents. It also inviteslocal officials, giving them a spot on thepodium and videos of the events to promotehonesty and to add gravitas to the proceed-ings. Not infrequently, the official informa-tion is wrong, exaggerating the distancematerials had been transported or theamount of work done. These hearings and the

monitors road-building – examining theoriginal plans then sending young people outinto the field to discover what, if anything,was actually built, and if so, how well it wasconstructed. The TAN projects thus link anti-corruption advocacy with citizens’ andschoolchildren’s own interests, allowing themto learn valuable lessons about citizen powerand good governance.

Clean hands in Cambodia. In 2005, in partner-ship with a wide range of organizations, theNGO Pact Cambodia launched the ‘CleanHand Campaign Against Corruption’. Thecampaign aimed to mobilize public supportfor anti-corruption efforts and increase thewillingness of people to talk openly aboutcorruption. The campaign involved publica-tions, radio shows, television, posters andmany other materials, including stickers andt-shirts.

New laws in the Republic of Korea. Over twentynational NGOs formed the Civic SolidarityNetwork for the Legislation of Law to PreventCorruption. This law was proposed to parlia-ment in late 2000 through public hearings andenacted in June 200133 and resulted in theestablishment of the Korea IndependentCommission Against Corruption.34

Social auditing in Pakistan. In 2001, theNational Reconstruction Bureau introduceddevolution of political authority to the districtlevel. The aim was to improve access to publicsector services, encourage sustainability oflocal development initiatives and mobilizecommunity resources, while increasingtransparency and reducing leakages ofresources. On way of checking whether thereforms are having the desired effect has beenthrough social audits. With regard tocorruption, the 2004/2005 social auditsfound that around 60 per cent of respondents


public awareness they create, have helpedlimit public-works corruption in Rajasthan.Their collective nature has largely neutralizedany feeling of intimidation that illiteratelabourers would have felt otherwise alongwith the fear of retribution. This can workbest when CSOs and public officials worktogether.

Keeping Up the PressureKeeping Up the PressureKeeping Up the PressureKeeping Up the PressureKeeping Up the Pressure

Both media and civil society organizationscan thus help sustain a social and political

climate that is hostile to corruption. Clearlythey have their limitations. In highlycorrupt and repressive societies they will findit very difficult to operate. Many struggle tosurvive. In numerous countries, however,they have shown how it is possible to keep upthe pressure on politicians, public servicesand hold them to account. And if they havethe benefit of a supportive politicalenvironment, they can amplify and reinforcea government’s commitment especiallywhen action fails to live up to the officialrhetoric.

There are two ways to wash the dishes.One way is to wash them to get them clean.The other way is to wash them in order towash the dishes.THICH NHAT HANH

It has been said that democracy is the worstform of government, except all the others thathave been tried.SIR WINSTON CHURCHILL

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Driving Out CorruptionDriving Out CorruptionDriving Out CorruptionDriving Out CorruptionDriving Out Corruption 88888

Most of today’sdeveloped countries

achieved greatercontrol over

corruption as a by-product of human

development

By the end of 2007, across the world, 104governments had ratified or acceded to theUnited Nations Convention Against Corrup-tion. This is a heartening indication of achanging international mood, as well as afresh commitment from many developingcountries to tackle an age-old problem withgreater urgency and determination.

They have history on their side andparticularly the experience of richer coun-tries. Over the centuries, most of today’sdeveloped countries achieved greater controlover corruption as a by-product of the develop-ment process. Steadily, they built strongerinstitutions that operate within clearly definedsystems of incentives and rewards, checksand balances, separation of powers as well asreduced red-tape. They also benefited fromrelatively engaged and free media and otherorganizations of civil societies, which moni-tored governments and exposed misdeeds.

The process is certainly incomplete whilethe political and business landscape indeveloped countries is still regularly illumi-nated by the flares of high-level scandal andcorruption. To some extent, governmentshave even legalized corruption as is seen insome types of permitted high-pressurelobbying. Nevertheless, it is now rare to seecorruption on a large and systemic scale.

The developed countries have also beenable to reduce one of the principal causes of

corruption: shortages. The day-to-day corrup-tion that affects daily lives of citizens is undercheck. Centuries of development in richercountries have contributed to an age ofabundance. This is evident in health services.With the notable exception of a few, mostadvanced countries have health services thatprovide basic and inexpensive or free accessfor all. Electricity and water supplies too arewidely available. Indeed, in countries whereutilities have been privatized, one of the mainproblems is to have an actual sense of qualityservice – since standards are difficult tocompare across competing providers – andfend off a barrage of sales calls from compe-ting providers.

The situation remains very different inmany developing countries of Asia and thePacific where government institutions areoften weak and thus susceptible to bribesfrom business interests, that take advantageof the greed of corrupt politicians or civilservants. At the same time, most publicservices and utilities remain plagued byextensive shortages, generating opportunitiesfor officials to demand ‘speed money’ or‘grease money’ to complete the simplest tasks;also resulting in ‘survival corruption’ amongthe poor. Even when dealing with somerelatively modern corporations, customerscan be expected to bribe employees to get asatisfactory service.

Corruption may have been viewed in the past as unpleasant and unethical and probablyunavoidable. Now across the Asia-Pacific region it is being pushed more into the foregroundand challenged as being damaging and unacceptable. Governments and civil society, at nationaland international levels, are finding new ways to drive out corruption, working both from thebottom up and top down.


Today, genuinelycombatingcorruption makesmore political sensethan ever before

goods and services offered but also in the waythey produce them.

This has been evident in campaigns toeliminate child labour, for example, and toensure decent pay and conditions forworkers. Now the same impetus is reachinginto areas widely tainted by corruption;particularly the extraction of naturalresources. Consumers all over the world,whether distressed at the losses of naturalhabitats or species, or fearful of globalwarming, are demanding certification that thegoods they buy have been produced underenvironmentally responsible conditions. Asearlier chapters have indicated, in the Asia-Pacific region this is often not the case. Manylogging or mineral extraction companies workhand in hand with corrupt local and nationaladministrations. Indeed some transnationalcorporations have succeeded in ‘statecapture’. Now, however, these companies findthemselves under greater pressure frominternational buyers who are askingawkward questions about how thesecompanies have acquired their privilegedpositions and where they have sourced theirraw materials.

Global commercial pressures are nowbeing complemented by international politicalaction. In the past, the rich countries generallyturned a blind eye when their companiesbribed officials in developing countries. Now,however, the OECD countries are settingstandards that their companies have to followanywhere in the world. Companies found tobe paying bribes overseas are now liable to beprosecuted at home.

Seizing the Moment: Combining PressureSeizing the Moment: Combining PressureSeizing the Moment: Combining PressureSeizing the Moment: Combining PressureSeizing the Moment: Combining Pressurefrfrfrfrfrom Abovom Abovom Abovom Abovom Above with Ve with Ve with Ve with Ve with Voice froice froice froice froice from Belowom Belowom Belowom Belowom Below

This coming together of national andinternational pressures, reinforced throughthe increased potential for networkingwithout the limitations of national borders

The TThe TThe TThe TThe Turning Turning Turning Turning Turning Tideideideideide

Nevertheless the tide seems to be turning –hesitantly, perhaps, and in uncertaindirections, but there are definite signs ofactions that increasingly confront corruption.Citizens are becoming increasingly impatient– expecting cleaner government andbusinesses – and governments are starting torespond. As ever, the first steps have beenrhetorical. Sensing a change in voter mood,today’s politicians in the Asia-Pacific regionnow find it worthwhile to place the fightagainst corruption high on their statedpolitical agendas, to show that they aretackling corruption.

Military leaders who in the past mighthave justified coups to ‘save the nation’ fromallegedly dangerous political ideology, are nowmore likely to claim that they are seizingpower to protect the public from corruptpoliticians. A grave danger of this new ‘coupdispensation’ is that popular anger at officialcorruption can become a pretext forsuppressing civil and political liberties, and,as a further consequence, even less publicaccountability. The growing distaste forcorruption among citizens sends an impor-tant signal to democratic leadership – today,genuinely combating corruption makes morepolitical sense than ever before. This isespecially so in sectors like water andelectricity, health and education, which notonly confers credibility to the government, italso greatly promotes everyday citizensatisfaction, while helping achieve the MDGsand further human development.

National political imperatives are beingreinforced by international economicpressures. The Asia-Pacific region is now theheartland of globalization. Its largestmanufacturing and service corporations aremajor players on the world stage. Havingachieved global reach, they also have to meetglobal standards, not just in the quality of the


The Report hasidentified three

areas to considerfor focus – the

police, socialservices, and

natural resources

through communications technologies, iscreating new opportunities across Asia andthe Pacific. How can the countries of theregion best seize the moment? As this Reporthas illustrated, there is no one route or singleanswer. Action has to come from manydirections. Governments can achieve a greatdeal by establishing a legal framework,strengthening public institutions and buildingsystems of control to ensure that theiradministrations operate openly and trans-parently. These systems will work best if theyare supported by many elements of civilsociety, and in particular by NGOs and themedia, which can monitor government andbusinesses and help keep them honest. Action,thus, has to come simultaneously from aboveand below.

Any faltering resolution at the top needsto be propped up by ongoing pressure frombelow – from a civil society that is aware,expects change, and that can rely on free andcompetitive media for whom exposingcorruption is both a duty and an opportunity.This combination of pressure from above andfrom below – a ‘sandwich situation’ thattriggers a symbiotic relationship, eachstrengthening the other1 – can dissuadepotential corruptors and the corrupted frompursuing immediate gain at the cost ofinstitutions. It can not only help build andretain political will over time, it can alsoprovide good reason for political leadershipto stay the course of public interest.

Much of this involves the pursuit ofjustice – exposing and prosecuting the guilty.But anti-corruption can also be viewed in amore positive light. Politicians, civil societyleaders and businessmen/women who workto combat corruption can also point to thehuge political and economic dividends onoffer. Politicians, for example, who can claimcredit for rooting out corruption from sectorslike water and electricity, health and

education, can derive fresh sources oflegitimacy from a more satisfied electorate.And businesses that align themselves withhigher standards of corporate governance candevote their energies to boosting their owngrowth and profits legitimately rather thanseeing their investment funds leech awayunproductively into the pockets of corruptofficials.

At the same time, governments and civilsociety organizations working to combatcorruption will also be sustaining democraticgovernance. For just as democracies can beundermined by corruption, so they can alsobe fortified by effective, transparent, andclosely monitored national institutions thatsustain their integrity within interlockingsystems of checks and balances. Empoweringpeople through citizen education is thefoundation for prevention that can reduce theextent of catch now and punish later.

Setting the PrioritiesSetting the PrioritiesSetting the PrioritiesSetting the PrioritiesSetting the Priorities

Nevertheless, addressing corruption can be adaunting proposition. Governments may findthemselves facing a broad array of complexand difficult issues, while lacking the fundsand personnel to respond effectively. There isalways the danger therefore that theresponsibility of fighting corruption will fallon the shoulders of a small number of honestbut already overburdened officials.

It may be better therefore to focus initiallyon a few specific areas. Naturally thosepriorities will depend very much on nationalcircumstances. Across a region as vast anddiverse as Asia and the Pacific, the approacheswill often differ radically from one country toanother. The Report has identified three areasto consider for focus – the police, socialservices, and natural resources – as, from ahuman development perspective, one criteriais clear: governments should be seeking ways


Governments shouldbe seeking ways ofreducing the formsof corruption thathit the poor thehardest

All countries in theregion should jointhe United NationsConvention AgainstCorruption

of reducing the forms of corruption that hitthe poor the hardest. Hauling the rich andpowerful before the courts may grab theheadlines, but the poor will benefit more fromefforts to eliminate the corruption thatplagues their everyday lives.

Countries could make immediateprogress by identifying and dealing with someof the worst areas, whether in health services,education or in public utilities, and thusimprove the access of the poor to essentialservices. This will also have immediatepolitical dividends. Education, in particular,also is a means to help prevent corruption,including its inter-generational spread. Someof this type of corruption is termed ‘petty’ inthe literature. But this is clearly a misnomer.The dollar amounts may be relatively small,but the demands are incessant, the number ofpeople affected enormous, and the share ofincomes of the poor high.

Another priority should be addressingcorruption within police forces. This is partlybecause of the immediate damage it causes,since corrupt police officers are in a uniquelypowerful position – able to back demands forbribes with physical or sexual violence – butalso because addressing corruption within thepolice and justice systems can pave the wayfor dealing with corruption elsewhere.Improving police services so the personnel areseen as friends of honest citizens can greatlyreduce the sense of fear and injustice amongthe poor.

Natural resources need prioritized atten-tion as well before it is too late, especiallywhere they are the backbone of livelihood forthe poor. With the growing internationalrecognition on the degradation of the environ-ment and climate change, there is little timeto lose in preserving our natural resources.Even when governments have laws in placefor managing the utilization of forests,fisheries, land and minerals, corruption canundermine such legislation because of the

huge profit potential. The worst affected arepeople in remote locations and the poor.

An AgAn AgAn AgAn AgAn Agenda for Actionenda for Actionenda for Actionenda for Actionenda for Action

Although the appropriate measures for tack-ling corruption will depend on national cir-cumstances addressing local complexities,some of which have been detailed in earlierchapters, a number of options are commonacross many countries. Drawing upon them,here is a seven-point agenda:

1. Join with International Efforts1. Join with International Efforts1. Join with International Efforts1. Join with International Efforts1. Join with International Efforts

All countries in the region should becomeparty to the United Nations ConventionAgainst Corruption (UNCAC). ThroughUNCAC, both developed and developingcountries can cooperate to develop a commonunderstanding of corruption issues anddevise a coherent set of strategies. By actingtogether they can also frustrate corrupt indi-viduals and corporations who seek to exploitdifferences in national laws and procedures.In addition, member countries can supporteach other in building technical capacity –establishing links between complementaryinstitutions and strengthening prosecutingagencies, while establishing broad frame-works for prevention.

Another important international opportu-nity is afforded by the Stolen Assets Recovery(StAR) Initiative, a partnership between theWorld Bank and the United Nations Office ofDrugs and Crime, which allows developingcountries for the first time to recover – fromsafe havens in developed nations – assets thathave been stolen by corrupt leaders.

Despite the value of these two inter-national agreements, they are still far fromachieving universal acceptance. As ofDecember 2007, of the 30 OECD countriesonly 19 had acceded to UNCAC and of the164 developing countries2 only 94 had done


There can also bebenchmarks for

national media –press, radio, TV

and the internet –on characteristics

that affect theirability to expose

corruption

so. In the Asia Pacific the proportion is evenlower, 10 out of 35, so there is still a longway to go. Thus, in addition to action bygovernments, CSOs and the media could jointhe debate to make constructive suggestionsin addressing the concerns of governments.

2. Establish Benchmarks of Quality2. Establish Benchmarks of Quality2. Establish Benchmarks of Quality2. Establish Benchmarks of Quality2. Establish Benchmarks of Quality

To reduce corruption, governments will wantto design public institutions that incorporatethe necessary controls, checks and balances.This is a difficult task. So, to judge theirsuccess, a starting point could beinternational benchmarks – standards thathave been set around the world for differenttypes of organizations. These can be tailoredto country contexts. Benchmarks can apply,for example, to anti-corruption agencies,using indicators that reflect the methods forappointing the head of the agency, the securityand independence of its funding, and itsstaffing levels. The effectiveness of anti-corruption agencies can also be assessed bythe number of offices or sectors that areimmune from investigation, the protectionthat they afford to whistle-blowers, and theproportion of complaints that theyinvestigate. Similar indicators could bedevised for other institutions that have astrong bearing on corruption, such as theoffices of the auditor general.

There can also be benchmarks for nationalmedia – press, radio, TV and the internet –on characteristics that affect their ability toexpose corruption. These could include typeof ownership, editorial independence,freedom from censorship and the extent ofcompetition. These and other benchmarkscan help assess gaps and deficiencies andindicate what it would take to remedy them.

3. Strengthen the Civil Service3. Strengthen the Civil Service3. Strengthen the Civil Service3. Strengthen the Civil Service3. Strengthen the Civil Service

Countries with high levels of corruption

generally have weak civil services, withunderpaid and under-trained staff. This is adifficult issue, since raising standards orwages may require significant investmentbeyond the budgets of poorer countries. Itmay, however, be possible to raise salaries tolevels that are at least closer to those prevail-ing in the private sector. But all governmentsshould be able to create public bodies such ascivil service commissions that can overseerecruitment and ensure that appointmentsand promotions are based on merit, notfavouritism. These measures would need tobe complemented by rigorous systems ofmonitoring and control that can detectcorruption swiftly and punish it severely.

While it is necessary to strengthennational civil services, what is probably moreimportant is to build capacity at the local level.A number of countries in the region are decen-tralizing many functions to lower tiers of govern-ment, but find that local officials or institutionslack the necessary funds or skills. Combinedwith weak systems of monitoring and control,this can lead to higher levels of corruption.

Governments and donors will clearlyneed to invest much more in local government.In doing so, they should be able to capitalizeon the knowledge and experience of honestpublic officials who can suggest the mosteffective forms of control that will limit theopportunities for corruption, while suppor-ting their efforts to carry out their dutiesresponsibly.

4.4.4.4.4. EncouragEncouragEncouragEncouragEncourage Codes of Conducte Codes of Conducte Codes of Conducte Codes of Conducte Codes of Conductin the Private Sectorin the Private Sectorin the Private Sectorin the Private Sectorin the Private Sector

The responsibility for controlling corruptioncannot be left entirely in the hands ofgovernments and civil society. The privatesector too should play its part, showing adetermination first of all to obey the law andalso to add its own expertise to the struggleagainst corruption. This could include, for

Governments anddonors will clearly

need to investmuch more in local

government


One of the mostpowerful ways ofcontrollingcorruption is byensuring thatcitizens are privyto most of thesame information astheir governments

obscurity of dusty files and complexadministrative systems. Information techno-logy and e-governance, however, offer freshopportunities to make administration moreopen, transparent and neutral, reducing thelayers and number of face-to-face interac-tions, thus breaking the monopoly of corruptofficials and allowing citizens to keep abreastof administrative processes.

Information technology has alreadyshown its value in a number of countries byspeeding up court processes and systems ofland registration. It is also, for example,allowing public utilities to establish ‘one-stopshops’ where all the elements required toachieve a new power connection are broughttogether for their convenience, without havingto traipse from one office to another withmultiple bribes harvested en route.

Public IT projects can have their problems.Often they are overly ambitious and costs canspiral out of control. There is always the riskthat officials may exploit the systems fortheir own corrupt purposes. But relativelymodest IT systems can help to limit the exces-sive discretion of officials and help reassurecitizens that they will be treated fairly.

Information technology is one of the keycomponents of right to information processes,since responding over the internet candramatically reduce information publishingcosts. Here too there are hazards, notably therisks of releasing floods of electronicdocuments that make it difficult to discernthe critical facts and figures. This is an areawhere NGOs and the media can play animportant part, training both themselvesand the public on how to sift and analyzethe data.

New technology can also contribute tobetter monitoring of natural resources,through satellite imaging, and even at a moremodest level using digital cameras to monitorthe daily performance of education and healthservices.

example, strengthening codes of conduct forbusiness associations and professional bodies,as well as voluntarily enlisting with the UNGlobal Compact. Among the professions, themost critical ones for corruption are those oflawyers and accountants – without them,large scale corruption, specially that whichcrosses national borders, would not bepossible. In the codes of conduct, at bothnational and international levels, they couldincorporate ways to specifically take accountof corruption and establish appropriateguidelines. Services of senior lawyers, accountantsand professional associations could be utilizedfor this for better self-regulation and ensuringthat the codes of conduct are well publicized.

5. Establish the Right to Information5. Establish the Right to Information5. Establish the Right to Information5. Establish the Right to Information5. Establish the Right to Information

One of the most powerful ways of controllingcorruption is by ensuring that citizens areprivy to most of the same information as theirgovernments. Countries in the region couldenact laws on the right to information (RTI).They now have some tried and tested modelsto follow, including that of India, which hasone of the most progressive acts in thedeveloping world.

However, fulfilling the right to informa-tion requires much more than legislation – italso demands a new public ethos of openness.From the outset therefore, public officialsneed to be engaged and convinced about thevalue of RTI and develop the capacity to dealwith requests promptly and appropriately. Atthe same time, the media and other parts ofcivil society have to learn how to use RTI sys-tems responsibly. This could be fostered bypublic campaigns on TV, radio, the internetand newspapers, explaining what type of infor-mation is available and how to apply for it.

6. Lev6. Lev6. Lev6. Lev6. Leverageragerageragerage New Te New Te New Te New Te New Technoloechnoloechnoloechnoloechnologygygygygy

Much corruption thrives in the gloom, in the


progress towards the achievement of theMDGs and undermine the prospects of manypoor households. Uprooting corruption canthus improve the quality of governance andboost economic efficiency, while reducingpoverty and promoting human development.In this light, anti-corruption measures are notjust concerned about prevention orpunishment but also about establishing thevalues, institutions and systems that form thebasis of fairer societies. There are options –the history of corruption does not have to bethe region’s destiny.

The history ofcorruption does not

have to be theregion’s destiny

7. Support Citizen Action7. Support Citizen Action7. Support Citizen Action7. Support Citizen Action7. Support Citizen Action

Some of the most striking successes inaddressing corruption have occurred wherelocal organizations have taken the initiativeto monitor public works and investigate theextent to which officials and contractors havefulfilled their commitments. This has enabledcivil society organizations, local communitiesand local governments to work together tosupervise public projects. Given that localgovernments usually have a limited capacityto monitor projects themselves, they couldtake greater advantage of these opportunitiesby regularly publishing the basic informationon contracts to facilitate citizen auditing. Atthe same time there are many other actionsthat people can take as individuals to combatcorruption – asking questions – resistingdemands for bribes, reporting the activities ofcorrupt officials and refusing to deal withcorrupt businesses.

TTTTTaking the Higher Pathaking the Higher Pathaking the Higher Pathaking the Higher Pathaking the Higher Path

The developing countries of Asia and thePacific are likely to shed many corrupt prac-tices, in both government and business, as anatural by-product of modernization. How-ever, they do not have to wait for developmentto take its course for this. Nor should they.Just as most countries in the Asia-Pacific, inorder to improve the conditions of theirpoorest communities, are designing targetedpolicies and programmes to eliminate povertyand meet the other MDGs, so too can theydevise programmes specifically to tacklecorruption. As we have seen in this Report,some are already doing so.

Indeed this focus on corruption serves asimilar purpose, since corruption can hinder

WHAT INDIVIDUALS CAN DO

The primary responsibility for tackling corruption lies withgovernments. However with cooperation from businesses and civilsociety organizations that have the resources and the skills to carryout the necessary changes, individuals also have the power tocontribute. What can individuals do? As citizens and consumers, someof the ways in which people can use their power include:

Know your rights. Learn about your legal rights and entitlements suchas the right to information or eligibility under government schemes.

Exercise consumer power. Patronize only businesses you believe to bebehaving ethically and responsibly; your money is your economic vote.

Encourage politicians fighting corruption. Vote for people who vow totackle corruption and check whether they are following through ontheir promises.

Support community groups who check local services. This would include,for instance, parent-teacher associations to watch over the conduct ofschool management and neighbourhood groups which monitor socialservices.

Learn how to file complaints. Find out how to lodge complaints againstcorrupt services, whether directly or through NGOs, trade unions, orbusiness organizations.

Report corruption. Take the time to report any instance of corruptionyou have encountered, however minor.

Resist demands for bribes. While it may seem easier to pay bribes tosidestep red tape or gain quicker access, in the long run almosteveryone loses.


Chapter 1Chapter 1Chapter 1Chapter 1Chapter 1

1. Dreze and Sen 2002; Sen 1997a; Sen 1997b;Sen 1999.

2. Rajivan 2007b.3. This distinguishes corruption from other

crimes or undesirable phenomenon that mayalso need regulation – murder, break-in,littering, etc.

4. An example of differences in norms withinthe same country relates to punctuality. In theUK, for example, while people are expected tocome to a meeting on time, in social situationsif the guests arrive on the dot they may findthe hosts still in the process of getting dressed.

In the context of corruption, bribing a policeconstable for a traffic violation is corruption,but when the same constable leaves a roadsidecafé after a snack without paying, it may beseen as perfectly natural. In fact if theconstable insists on paying, that may beconsidered odd, even suspicious – perhaps araid is being planned?

5. For example, in rural India the poor may thinkit is perfectly legitimate to draw water frompipelines that take water to the city (makingunauthorized holes in the pipes with theknowledge of field staff of the water board –even paying them a ‘fee’) when the pipes passthrough wayside villages without servingthem. But the city dwellers, and even thewater board, would consider such localcollusion a form of corruption - field staffcollecting bribes in return for turning a blindeye to the water theft and damage caused tothe infrastructure.

6. Kaufmann and Vicente 2005.7. Gampat 2007a.8. La Porta et al. 1997; Lipset and Lenz 2000;

Paldam 2002; Triesman 2000.9. Kautilya, The Arthashastra. Edited,

rearranged, translated and introduced by L.N.Rangarajan in 1992.

10. Numerator – The count of the number ofarticles or pages containing the words‘corruption’ and ‘fraud’ (and their variants,such as ‘corrupt’ or ‘fraudulent’).

NotesNotesNotesNotesNotes

Denominator – The deflator used is ‘Political’,i.e. the number of articles (or pages)containing the word ‘political’ (and itsvariants) which standardizes the numeratorcount and accounts for the amount of spacegiven in the newspapers to stories aboutcorruption and fraud. The series are expressedas three-year centered moving averages.Data sources – The information is from twosources: (a) The NY Times, regarded as anational newspaper of record, distributedinternationally, and (b) Ancestry.com awebsite which has records of scannednewspapers from small towns and cities acrossthe USA, beginning in the late 1700s to thepresent, providing data from a cluster ofnewspapers.

11. Tran 2007.12. The Standard 2006.13. UNDP 2007b.14. See Technical note 1 for a summary of various

measures of corruption.15. Lederman et al. 2001; Linz 1978; Panizza 2001.16. Gerring and Thacker 2004; Kunikova 2005.17. Fisman and Gatti 2002; Root 1999; Treisman

1999.18. Fisman and Gatti 2002; Huther and Shah 1998;

Knack and Azfar 2003.19. Durlauf et al. 2005; Mauro 1995.20. Bardhan 1997.21. Kaufman and Wei 1999; Svensson 2003;

Seligson 2002.22. Lui 1985.23. Acemoglu and Verdier 1998; Murphy et al.

1993.24. Sarte 2000.25. Barro 1990.26. Murphy et al. 1993.27. Li, et al. 2000.28. Gyimah-Brempong and Gyimah-Brempong

2006.29. Knack and Keefer 1995; Mauro 1995.30. Mo 2001.31. Rock and Bonnett 2004.32. Shleifer and Vishny 1993.

NOTESNOTESNOTESNOTESNOTES 157157157157157

33. Campos, Lien and Pradhan 1999.34. Rock and Bonnett 2004.35. Bardhan 1997.36. Johnson and Mitton 2001.37. Gampat, Sarangi and Wickramarathne 2007.38. LankaNewspapers.com 2006. At the time of

publication SLR110 = $1.39. Keen and Smith 2007.40. For a survey of the empirical evidence that

corruption reduces overall tax revenues, seeAbed and Gupta 2002.

41. Sanyal et al. 2000.42. Mauro 1997; Shleifer and Vishny 1993.43. Delavallade (n.d.)44. Akcay 2006.45. Gupta et al. 1998.46. Kaufmann et al. 1999.47. Gupta et al. 2002.48. Hunt and Laszlo 2006; Kaufmann et al. 2005.


1. UNODC 2005.2. Azfar and Gurgur 2005.3. World Bank 2000.4. Centre for Policy Alternatives 2007.5. Asian Human Rights Commission 2005.6. Olken and Barron 2007.7. Hasan 2006.8. Nissen 2005.9. Bhowmik 2005.

10. At the time of publication INR 38 = $1.11. National Human Rights Commission n.d.12. Jha 2003.13. Centre for Policy Alternatives 2007.14. Daily Times 2007.15. Amnesty International Malaysia 2007;

International Herald Tribune 2007.16. Masud 2002.17. Commonwealth Human Rights Initiative 2003.18. Transparency International 2007.19. Supreme Court of Pakistan 2007.20. UNDP and Center for Policy and Human

Development 2007.21. The Sunday Times 2000.22. Rajivan 2007a.23. Khan and Khan 2003.24. Transparency International Bangladesh 2005b.25. Ahmad et al. n.d.

26. http ://www.unodc.org/pdf/corruption/corruption_judicial_res_e.pdf

27. Jayawickrama 2007.28. Netto 2007.29. A television channel in India has used its

media power through a sting operation todemonstrate how the legal system may havebeen subverted in cases concerning the rich.See Aggarwal 2007.

30. Rajivan 2007a.31. World Bank 2001.32. Bharuka 2005.33. Xie 2007.


1. Prevenslik-Takeda 2006.2. Lewis 2006.3. Ibid.4. Lewis 2007.5. Prevenslik-Takeda 2006.6. Lewis 2006.7. Azfar and Gurgur 2001; Azfar et al. 2001.8. Azfar and Gurgur 2001.9. Gupta et al. 2000.

10. Lewis 2006.11. Barber, Bonnet, and Bekedam 2004.12. BBC News 2005.13. Campos and Pradhan 2007.14. Wei 2007.15. UNESCO and IIEP 2007.16. Bennet 2000.17. Community Information and Epidemological

Technologies 1999.18. U4 Anti-Corruption Centre n.d.19. Chaudhury et al. 2006.20. Luo and Ye 2005.21. Knack and Sanyal 2000; Mauro 1998.22. Gupta et al. 2000.23. Johnston 2007.24. Banerjee and Duflo 2006.25. Chapman 2002.26. UNICEF Islamabad (Pakistan) 2007.27. UNICEF Islamabad (Pakistan) 2007.28. UNESCAP et al. 2007.29. DFID 2002.30. Sohail and Cavill 2007.31. Stålgren 2006.32. Gulati and Rao 2007.


33. The Economic Times 2007.34. ADB 2005.35. Sohail and Cavill 2007.36. Wax, Emily 2007.37. Transparency International India 2005.38. Gulati and Rao 2007.39. Ibid.40. Stålgren 2006.41. Gulati and Rao 2007.42. Lovei and Whittington 1993.43. Marketplace 2007.44. Bearse et al. 2000.


1. Escaleras et al. 2006.2. Le Billion 2005.3. Le Billion 2005.4. Le Billion 2005.5. OECD 2005.6. Schultz and Soreide 2006.7. Olken 2007b.8. Rajivan 2007c; Burra 2007.9. Larmour and Barcham 2005.

10. UNESCAP 2001.11. Burra 2007.12. UNESCAP 2001.13. Olken 2007a.14. Burra 2007.


1. World Resources Institute in collaboration withUnited Nations Development Programme,United Nations Environment Programme, andWorld Bank 2005.

2. Seneviratne 2007.3. Greenpeace International 1997.4. USAID 2005.5. Robbins 2000.6. Transparency International 2002.7. Transparency International 2004.8. Transparency International Bangladesh 2005a.9. Viet Nam Net 2005.

10. UNDP 2004.11. OECD 2007.12. Shah 2004.13. World Bank 2002.

14. OECD 2007.15. UNDP 2006.16. Hussain 2005.17. FAO 2006.18. OECD 2007.19. Tidwell n.d.20. Lowe 2002.21. FAO 2003.22. OECD 2007.23. World Bank 2006c.24. USAID 2004.25. UNEP 2007.26. Environmental Investigation Agency 2005.27. Kinshor and Damania 2007.28. UNEP 2003.29. Jarvie et al. 2004.30. Kinshor and Damania 2007.31. OECD 2007.32. Lin 2005.33. WWF/TRAFFIC 2002.34. World Bank 2005.35. World Bank 2005.36. World Resources Institute in collaboration with

United Nations Development Programme,United Nations Environment Programme, andWorld Bank 2003.

37. World Resources Institute in collaboration withUnited Nations Development Programme,United Nations Environment Programme, andWorld Bank 2003.

38. Transparency International 2006c.39. Environmental Investigation Agency/Telapak

2002.40. Goodman and Finn 2007.41. ADB 2006b.42. ADB 2006b.43. WWF n.d.44. Goodman and Finn 2007.45. People’s Daily 2005.46. Wade 1982.47. UNDP 2007.48. Briscoe 2005.49. Kachin Development Network Group 2007.50. Environmental Investigation Agency/Telapak

2007.51. UNDP 2007.52. Renner 2002.53. Ngamcharoen 2001.54. World Resources Institute in collaboration with

NOTESNOTESNOTESNOTESNOTES 159159159159159

United Nations Development Programme,United Nations Environment Programme, andWorld Bank 2003.

55. Dogra 2007.56. World Bank 2006a.57. OECD 2007.58. Global Witness 2005.59. Hawley 2003.60. Harris and Rajora 2006.61. Lin 2005.62. TRAFFIC 2004.63. World Bank 2007a.


1. Stanmayer 2004.2. Elliott 2007.3. Anti Corruption Commission 2007.4. World Bank 2006d.5. A questionnaire was sent to the governance

focal points of 23 UNDP country officescovering 35 countries for information onanticorruption agencies and legislation, mediaand access to information. More informationon the survey can be accessed fromwww.undprcc.lk.

6. ADB/OECD Anti-Corruption Initiative forAsia and the Pacific 2004.

7. Quah 2007a.8. Republic of Singapore 1994.9. ICAC 1989.

10. Quah 2007a.11. http://cvc.nic.in/cvc_back.htm12. Quah 2007a.13. Section 8 Anti-Corruption Act of 1997. Cited

in Quah 2007a.14. http://www.paclii.org/pg/OC/main.htm15. Transparency International 2003.16. Quah 2007a.17. Office of the Ombudsman Republic of the

Philippines n.d.18. Quah 2007a.19. Upadhyay 2002.20. Korea Independent Commission Against

Corruption 2006.21. Quah 2007a.22. UNDP 2005.23. Commission Against Corruption 2006.24. Davidsen et al. 2006.

25. UNDP 2005.26. UNDP 2005.27. UNDP 2005.28. ADB/OECD Anti-Corruption Initiative for

Asia and the Pacific 2004.29. Independent Commission Against Corruption

(2004; 2007).30. Quah 2007a.31. Corrupt Practices Investigation Bureau 2006.32. Tan 1999.33. Quah 2007b.34. Dhiravegin 1978; Gonzalez and Mendoza

2004.35. Partnership for Governance Reform 2001.36. Transparency International 2002.37. Stanway 2007.38. Warwick 1987.39. Republic of Korea 1998.40. Government of India 2006.41. Naidu 2006.42. End-use exemptions are a major source of

corruption for taxes on many commodities andservices.

43. Hines 2005.44. Asher 2001.45. Aggarwal 1991.46. These criteria were: ownership of a credit

card, ownership of a house, ownership of acar, payment of an electricity bill of more thanRs. 50,000 per month, leaving the countryduring the year and membership of a club.The scheme was eliminated in 2006-07(Aggarwal 1991).

47. International Tax Dialogue 2005; Keen andSmith 2007.

48. Kpundeh 1998.49. Chan 2007.50. Estache et al. 2000.51. Banisar 2006.52. Inernational Press Institute 2006.53. No. 22 of the 2005 Indian Right to Information

Act. Cited in Mendel 2007.54. Articles 9-12. Cited in Mendel 2007.55. Mendel 2007.56. Section 4 (3) and (4) of the 2005 Indian Right

to Information Act. Cited in Mendel 2007.57. Article 9 under the 2002 Federal Transparency

and Access to Public Government InformationLaw. Cited in Mendel 2007.

58. The Freedom of Information Act 2000, section19. Cited in Mendel 2007.


59. Section 24(1) of the 2005 Indian Right toInformation Act. Cited in Mendel 2007.

60. The 1999 Law Concerning Access to Informa-tion Held by Administrative Organs – Article5. Cited in Mendel 2007.

61. Section 15(2) and 15(3) of the 1997 ThaiOfficial Information Act. Cited in Mendel2007.

62. Section 8(2) of the 2005 Indian Right toInformation Act and Article 7 of the 1999 LawConcerning Access to Information Held byAdministrative Organs. Cited in Mendel 2007.

63. Section 17 of Article XI of the 1987 Consti-tution.

64. Section 8 of Republic Act No. 6713 onstandards for public officials. Cited in Mendel2007.

65. Bharuka 2005.66. Central Vigilance Commission n.d.67. Choi and Moon-Suk 2001.68. Bhatnagar and Chawla 2001.69. ADB/OECD 2006b.70. Control Risks Group Limited and Simmons &

Simmons 2006.71. UNGC (United Nations Global Compact) n.d.72. Financial Action Task Force on Money Laun-

dering n.d.73. World Bank and UNODC (United Nations

Office on Drugs and Crime) 2007.74. World Bank and UNODC (United Nations

Office on Drugs and Crime) 2007.75. In 2000, two countries, Australia and the

Republic of Korea, are in both the OECD andAsia Pacific. Diamond and Diamond 2002;Hines and Rice 1994; OECD n.d.(a); OECDn.d.(b).

76. Capgemini and Merrill Lynch 2006.77. EIA 2007.78. World Bank and UNODC (United Nations

Office on Drugs and Crime) 2007.


1. BBC News 2001.2. Taylor 2005.3. Coronel 2007.4. Brunetti and Weder 2003.5. Ferdinand 2003.6. Ferdinand 2003.7. Struck 2000.

8. Coronel 2007.9. Coronel 2007.

10. Kristof 2005.11. Giridharadas 2007.12. Sen 1999.13. Coronel 2002.14. See the 2007 case of Uma Khurana in India.15. Perry 2002.16. Coronel 2002.17. Khadka 2007.18. Keaeke 2003.19. USAID 2006.20. Development Gateway Foundation 2004.21. For example, six attempts of judicial review

have been submitted to the ConstitutionalCourt challenging the authority of KPK.

22. A senior Government official once attributedthe slow process of development in one regionof the country to efforts to eradicatecorruption.

23. Deliberation of draft laws initiated by thepublic, such as those concerning Freedom forPublic Information and establishment of anombudsman’s office, has been delayed since2000.

24. Slim 2002.25. Stephens and Tazi 2006.26. Pongsapich n.d.27. Fox 2000; Transparency International 2000a.28. Wilson 1973.29. ADB/OECD 2006a.30. Transparency International 2000b.31. Ramkumar and Krafchik 2005.32. Dharmaraj 2007.33. ADB/OECD 2000.34. Korean Educational Development Institute

2003.35. Andersson et al. 2005.

Chater 8Chater 8Chater 8Chater 8Chater 8

1. The idea of a ‘sandwich’ situation in publicpolicy – a combination of pressure from abovethrough political will, retained over timethrough public expectations from below – hasbeen discussed earlier in the context ofcombating hunger and reducing malnutrition.

2. Developing countries here refer to UNDPprogramme countries.

BIBLIOGRAPHYBIBLIOGRAPHYBIBLIOGRAPHYBIBLIOGRAPHYBIBLIOGRAPHY 161161161161161

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INDICAINDICAINDICAINDICAINDICATTTTTORSORSORSORSORS 183183183183183

Readers’ Guide and Notes to TReaders’ Guide and Notes to TReaders’ Guide and Notes to TReaders’ Guide and Notes to TReaders’ Guide and Notes to Tablesablesablesablesables

This guide contains statistics pertaining tocorruption and human development in allcountries and territories of the Asia-Pacificregion. The indicators are grouped into threebroad categories: (1) popular measures ofcorruption, (2) political economy conditionsthat could be linked to corruption, and(3) socio-economic factors. This last categoryincludes the human development index(HDI) and indicators relating to theMillennium Development Goals (MDGs).

Data CovData CovData CovData CovData Coverageragerageragerageeeee

For the purposes of this report, countries andterritories in the Asia-Pacific region have beengrouped into three categories: East Asia,South and West Asia, and the Pacific. Thetotal number of countries and territories is44: 18 from East Asia (Brunei Darussalam,Cambodia, China, Hong Kong China (SAR),Indonesia, Japan, Korea Rep. of, Korea DPR,Lao PDR, Macao China (SAR), Malaysia,Mongolia, Myanmar, Philippines, Singapore,Thailand, Timor-Leste, Viet Nam); 9 fromSouth and West Asia (Afghanistan,Bangladesh, Bhutan, India, Iran Islamic Rep.of, Maldives, Nepal, Pakistan, Sri Lanka);and 17 from the Pacific (Australia, CookIslands, Fiji, Kiribati, Marshall Islands,Micronesia Fed. Sts., Nauru, New Zealand,Niue, Palau, Papua New Guinea, Samoa,Solomon Islands, Tokelau, Tonga, Tuvalu,Vanuatu). They are presented in alphabeticalorder within groups. Blanks (..) indicate non-availability of data.

Data Sources and InconsistenciesData Sources and InconsistenciesData Sources and InconsistenciesData Sources and InconsistenciesData Sources and Inconsistencies

The Regional Human Development ReportsUnit is a user of datasets, not a producer. TheReport draws from data produced by inter-national institutions with the resources andexpertise to collect them. Data sources aregiven in abbreviated form at the end of eachtable, while the full citations are available inthe statistical reference. These sources areUNSTAT online, The World Bank, UNDPGlobal HDR (not a data producer), Univer-sity of Maryland, Transparency Internationaland International Country Risk Guide(ICRG) ratings by Political Risk Service (PRS)group. Use has also been made of onlinesources but URLs may change over time,which explains why the date of access of agiven website is mentioned for all onlinesources.

Because international sources often relyon data supplied by national authorities, therecan be inconsistencies between the datareported by these two sources. There areseveral reasons for this. International dataagencies often apply international standardsand harmonization procedures to improvecomparability across countries. When inter-national data are based on national statistics,as they usually are, national data may need tobe adjusted. When data for a country aremissing, an international agency may producean estimate. Because of the difficulties incoordination between national and interna-tional data agencies, international data seriesmay not incorporate the most recent data.


All these factors can lead to inconsistenciesbetween national and international estimates.

As international data agencies conti-nually improve their data series, includingupdating historical data periodically, theindicators across editions of the RHDR maynot be comparable.

TTTTTimelinesimelinesimelinesimelinesimelines

This report uses the most recent informationavailable as of September 2007. In addition,data are presented at different points in time,in order to capture trends over a longerperiod. Thus, the tables present data on mostindicators at five-year intervals (i.e. 1990,1995, 2000) and the latest year for whichdata are available for most countries. Forexample, the latest Corruption PerceptionsIndex refer to 2007 while some socio-economic indicators refer to 2004. The latestdata for most indicators are for 2005. How-ever, data for all four reference points are notavailable for some indicators. This gap hasbeen addressed, whenever possible, by report-ing data for the year nearest the referencepoints.

Country NotesCountry NotesCountry NotesCountry NotesCountry Notes

Data for China do not encompass Hong Kong,China (SAR), Macao, China (SAR) or TaiwanProvince of China, unless otherwise noted.Timor-Leste became an independent countryon May 20, 2002. Data for Indonesia includeTimor-Leste through 1999, unless otherwisenoted.

NONONONONOTES ON SELECT INDICATES ON SELECT INDICATES ON SELECT INDICATES ON SELECT INDICATES ON SELECT INDICATTTTTORSORSORSORSORSIN THE TABLESIN THE TABLESIN THE TABLESIN THE TABLESIN THE TABLES

TTTTTable 1: Pable 1: Pable 1: Pable 1: Pable 1: Popular Measuropular Measuropular Measuropular Measuropular Measures of Corruptiones of Corruptiones of Corruptiones of Corruptiones of Corruption

The RHDR tables present the three mostpopular ‘measures’ of corruption, particu-

larly in terms of their empirical coverage ofthe Asia-Pacific region. First, the WorldBank’s Control of Corruption Index (CCI),which captures corruption for a large numberof countries, draws upon multiple sources ofdata. Second, another popular measure ofcorruption is the International Country RiskGuide (ICRG) corruption risk ratings by thePolitical Risk Services (PRS) group. However,it primarily caters to business interests,which limits its use for broader analyticalpurposes. Third, perhaps the most popularmeasure of corruption is TransparencyInternational’s (TI) Corruption PerceptionsIndex (CPI). This report does not makeextensive use of the CPI because this indexrelies heavily on perceptions. The threeindices are briefly discussed in the sectionsthat follow.

Control of Corruption IndexControl of Corruption IndexControl of Corruption IndexControl of Corruption IndexControl of Corruption Index

The CCI, produced by the World Bank,measures the extent to which public power isexercised for private gain. This includes bothpetty and grand forms of corruption, as wellas ‘capture’ of the state by elites and privateactors. It is based upon surveys of businessleaders, public opinion and assessments bycountry analysts and is available for 213countries and territories for the years 1996,1998, 2000, and 2002 to 2006. The CCIvalues are normally distributed with a meanof zero and a standard deviation of one in eachperiod. The values of the CCI range fromminus (–)2.5 to 2.5, with higher valuesindicating higher control of corruption;conversely, lower values indicate highercorruption.

ICRG Corruption ScoreICRG Corruption ScoreICRG Corruption ScoreICRG Corruption ScoreICRG Corruption Score

The ICRG corruption scores, produced byPRS, are assessments by staff and relate toactual and potential corruption in the


1 For detailed discussion, See Hawken and Munck 2007.

following forms: excessive patronage, nepo-tism, job reservations, ‘favour-for-favours’,secret party funding and suspiciously closeties between politics and business. The ICRGcorruption scores are available for 146countries from 1984 to 2006. The scoresrange from 0 to 6, where 0 indicates thehighest potential risk of corruption and 6indicates the lowest potential risk for anycountry. Higher corruption signifies that highgovernment officials are likely to demandspecial payments and that illegal paymentsare generally expected throughout lower levelsof government. This can transpire in the formof bribes connected with import and exportlicenses, exchange control, tax assessment,police protection or loan transactions.

Corruption Perceptions IndexCorruption Perceptions IndexCorruption Perceptions IndexCorruption Perceptions IndexCorruption Perceptions Index

The CPI, produced by TI, is a composite indexthat draws upon surveys of business peopleand assessments done by country analysts.The CPI ranks countries in terms of the degreeto which corruption is perceived to existamong public officials and politicians. TheCPI started with 41 countries in 1995 andexpanded to 180 countries in 2007. The CPIvalues vary from 0 to 10. A lower valueindicates high corruption perception in anycountry, while a higher value is an indicatorof low corruption perception.

Comparison of Corruption MeasuresComparison of Corruption MeasuresComparison of Corruption MeasuresComparison of Corruption MeasuresComparison of Corruption MeasuresAcrAcrAcrAcrAcross Countries and Toss Countries and Toss Countries and Toss Countries and Toss Countries and Timeimeimeimeime

The above measures of corruption must beinterpreted and used with care, not onlybecause corruption is largely an unobservablephenomenon but also because differentdefinitions, data sources and methodologiesto collect, process and aggregate data are oftenused.1

To some extent, most of these measuresrely on perceptions. Data based on percep-tions are generally problematic, in that theytell us more about the respondents thanabout corruption itself, and there is a widegap between perceived and ‘experienced’corruption. Perceptions are also particularlytroublesome as a source of comparative data.Specifically, once the reputation of a countryhas been established – in part through mediaattention to CPI rankings – it appears thatsubsequent CPI measures are stronglyaffected by previously published measuresand thus are not independent. There are alsogrounds for believing that measures mayreflect certain observable factors, such aspoverty or poor economic performance, whichare assumed to be consequences of corruptionand hence used to impute (backwards) thepresence of corruption. In either case, becausemeasures are not firmly rooted in first-handexperience with corruption, it is hard to havestrong confidence in comparisons of percep-tion-based measures of corruption, over time.

Then there is the issue of sample designand the design (and wording) of question-naires. Because ‘corruption’ can mean manythings, questions that use this word withoutdefining it, are of little use in an attempt toestimate the level of corruption acrosscountries or over time. Indeed, it is hard tocompare the responses from vaguely wordedquestions in any meaningful way. Yet suchpractices are common in questionnaires usedto gather data for popular measures. Like-wise, when different questionnaires that usedifferent questions are used to produce anindex, the lack of uniformity weakens thebasis for comparison. The desire to constructindices of broad empirical scope and todevelop time series is understandable andsuch attempts deserve to be supported.Nevertheless, it is also important to underline


62 low-, middle- and high-income countries.The survey was carried out on behalf of TI byGallup International, as part of the Voice ofthe People Survey between July andSeptember 2006.

An interesting features of the GCB is thatit measures the perception of corruption indifferent sectors/public institutions, suchas: politician/political parties; parliament/legislature; police; legal system /judiciary; taxrevenue; business/private sector; medicalservices; media; education system; utilities;registry and permit; services; the military;NGOs; religious bodies. These measures areratings on a scale of 1 (not at all corrupt) and5 (extremely corrupt).

TTTTTable 3: Impact of Corruptionable 3: Impact of Corruptionable 3: Impact of Corruptionable 3: Impact of Corruptionable 3: Impact of Corruption(Perceptions)(Perceptions)(Perceptions)(Perceptions)(Perceptions)

The Barometer, produced by TI, captures theexperience of bribery through sample surveys

the problems involved in questionnaires thatclearly were not designed to obtain equivalentmeasures across time and space. Finally,sample sizes and the respondent pool of thesurveys used to generate indices also varyconsiderably, raising yet new questions aboutcomparability. The need for further work todevelop and consistently apply an instrumentsuitable for measuring corruption across timeand space must be duly recognized.

TTTTTable 2: Corruption (Pable 2: Corruption (Pable 2: Corruption (Pable 2: Corruption (Pable 2: Corruption (Perererererceptions) in Publicceptions) in Publicceptions) in Publicceptions) in Publicceptions) in PublicInstitutions, Media and NGOsInstitutions, Media and NGOsInstitutions, Media and NGOsInstitutions, Media and NGOsInstitutions, Media and NGOs

Transparency International’s Global Corrup-tion Barometer (GCB) explores howcorruption affects ordinary people. The GCBprovides an indication of both the form andextent of corruption, from the viewpoint ofcitizens around the world. The GCB 2006 isthe fourth in a series from 2003 and reflectsthe findings of a survey of 59,661 people in

Name of index Strengths Weaknesses

Control of corruption • Broad empirical scope • Perceptions-based, vague and variable ques-index (CCI) • Attempt to construct an index encompass- tions; variable sample design

ing many manifestations of corruption • Aggregation of conceptually unrelated indica-tors; questionable aggregation rule

• Many of the sources of data cater to the needsof the business interest

Corruption perceptions • Broad empirical scope • Perceptions-based, vague and variable ques-index (CPI) • Attempt to construct an index that tions; variable sample design

captures mostly bureaucratic corruption • Aggregation of conceptually unrelated indica-tors; questionable aggregation rule

• The methodology of construction of indexchanges over time

• CPI mostly captures bureaucratic corruption,not political

• The subjective assessments by business peopleare prone to bias because of business interests

ICRG corruption scores • Attempts to capture actual and potential • Assessments by staffcorruption in the form of excessive • Looks at corruption through business interestspatronage, nepotism, job reservations, only‘favour-for-favours’, secret party funding,and suspiciously close ties between politicsand business

Source: Based on Hawken and Munck 2007.


during the previous 12 months. In addition,the Barometer measures people’s perceptionof the the impact of corruption on politicallife, the business environment and onpersonal and family life. The scale goes from1 (corruption has no impact) to 4 (corruptionhas a large impact).

TTTTTable 4: Pable 4: Pable 4: Pable 4: Pable 4: Political Climateolitical Climateolitical Climateolitical Climateolitical Climate

Extent of DemocracyExtent of DemocracyExtent of DemocracyExtent of DemocracyExtent of Democracy

Produced by the Centre for InternationalDevelopment and Conflict Management,University of Maryland, the operationaldefinition of a mature and internally coherentdemocracy is one in which (a) political parti-cipation is fully competitive, (b) executiverecruitment is elective, and (c) constraints onthe chief executive are substantial. The valuesof this measure vary between –10 (stronglyautocratic) to +10 (strongly democratic).

Durability of Current Political RegimeDurability of Current Political RegimeDurability of Current Political RegimeDurability of Current Political RegimeDurability of Current Political Regime

Produced by the Centre for InternationalDevelopment and Conflict Management at theUniversity of Maryland, this indicator refersto the number of years since the most recentregime change or the end of a transitionperiod defined by the lack of stable politicalinstitutions. The first year of the new regimeis given the value 0. Each subsequent yearadds one point. One must note that durabilityof the regime does not imply changes in thepolitical party in power but the number ofyears since the last substantive change inauthority characteristics.

Military in PoliticsMilitary in PoliticsMilitary in PoliticsMilitary in PoliticsMilitary in Politics

The PRS produced this measure which isbased on the premise that military involve-ment in politics (even at the peripheral level)diminishes democratic accountability, since

the military are not elected by anyone. Thevalues of this indicator vary between 0 and 6.Lower values indicate a greater degree ofmilitary participation in politics and a higherlevel of political risk.

TTTTTable 5: Govable 5: Govable 5: Govable 5: Govable 5: Governance Climateernance Climateernance Climateernance Climateernance Climate

Political StabilityPolitical StabilityPolitical StabilityPolitical StabilityPolitical Stability

The index of political stability, produced bythe World Bank, captures perceptions aboutthe likelihood that the government will bedestabilized or overthrown through unconsti-tutional or violent means, including politicalviolence and terrorism. The index values varybetween minus (–) 2.5 and 2.5; higher valuescorrespond to lower chances of governmentdestabilization.

Government EffectivenessGovernment EffectivenessGovernment EffectivenessGovernment EffectivenessGovernment Effectiveness

The index of government effectiveness,produced by the World Bank, captures thefollowing: quality of public services, qualityof the civil service, degree of the civil services’independence from political pressures, qua-lity of policy formulation and implementa-tion and credibility of the government’scommitment to such policies. The indexvalues vary between minus (–) 2.5 to 2.5;higher values correspond to better govern-ment effectiveness.

Government StabilityGovernment StabilityGovernment StabilityGovernment StabilityGovernment Stability

This indicator, produced by the PRS,represents an assessment both of thegovernment’s ability to carry out its declaredprogramme(s) and its ability to stay in office.The indicator is composed of three sub-components: government unity; legislativestrength; popular support. The values ofthis indicator vary between 0 and 12, wherelower values indicate a lower degree of


government stability and higher level ofpolitical risk.

Democratic AccountabilityDemocratic AccountabilityDemocratic AccountabilityDemocratic AccountabilityDemocratic Accountability

The PRS-produced indicator of democraticaccountability is a measure of how responsivea government is to its people. Its essentialmessage is that the less responsive it is, themore likely the government is to fall, peace-fully in a democratic society, but possiblyviolently in a non-democratic one. The valuesdepend on the type of governance experiencedin a particular country. The values of theindicator vary between 0 and 6. The highestvalue (lowest risk) is assigned to alternatingdemocracies, while the lowest value (highestrisk) is assigned to autarchies.

Bureaucracy QualityBureaucracy QualityBureaucracy QualityBureaucracy QualityBureaucracy Quality

The indicator of bureaucracy quality,produced by the PRS, measures the strengthand expertise of the bureaucracy to governwithout drastic changes in policy or interrup-tions in government services. The values ofthe indicator vary between 0 and 4. Highervalues imply better bureaucracy.

TTTTTable 6: Vable 6: Vable 6: Vable 6: Vable 6: Voice and Choice,oice and Choice,oice and Choice,oice and Choice,oice and Choice,and Legal Climateand Legal Climateand Legal Climateand Legal Climateand Legal Climate

VVVVVoice and Accountabilityoice and Accountabilityoice and Accountabilityoice and Accountabilityoice and Accountability

The index of voice and accountability,produced by the World Bank, measures theextent to which a country’s citizens are ableto participate in selecting their government,as well as freedom of expression, freedom ofassociation and free media. The index valuesvary between minus (–)2.5 to 2.5; highervalues correspond to greater voice andaccountability.

Rule of LawRule of LawRule of LawRule of LawRule of Law

The rule of law, produced by the World Bank,measures the extent to which agents haveconfidence in and abide by the rules of society.It also measures in particular the quality ofcontract enforcement, the police and thecourts, as well as the likelihood of crime andviolence. The index values vary betweenminus (–)2.5 to 2.5; higher values correspondto better rule of law.

Law and OrderLaw and OrderLaw and OrderLaw and OrderLaw and Order

Law and Order, produced by the PRS, areassessed separately, with each sub-componentcomprising 0 to 3 points. The law sub-component is an assessment of the strengthand impartiality of the legal system, while theorder sub-component is an assessment ofpopular observance of the law. Thus, acountry can enjoy a high rating of 3 in termsof its judicial system, but a low rating of 1 ifit suffers from a very high crime rate or if thelaw is routinely ignored without effectivesanction (i.e. widespread illegal strikes). Thevalues of the indicator vary between 0 and 6;higher values indicate greater strength andimplementation of the legal system.

TTTTTable 7: Economic Climateable 7: Economic Climateable 7: Economic Climateable 7: Economic Climateable 7: Economic Climate

Regulatory QualityRegulatory QualityRegulatory QualityRegulatory QualityRegulatory Quality

The index of regulatory quality, produced bythe World Bank, measures the ability of thegovernment to formulate and implementsound policies and regulations that permitsand promotes private sector development.The index values vary between minus (–)2.5to 2.5; higher values correspond to imple-mentation of sound policies and greaterpromotion of the private sector.


Con

td...

POPU

LAR

MEA

SURE

S O

F C

ORR

UPT

ION

POPU

LAR

MEA

SURE

S O

F C

ORR

UPT

ION

POPU

LAR

MEA

SURE

S O

F C

ORR

UPT

ION

POPU

LAR

MEA

SURE

S O

F C

ORR

UPT

ION

POPU

LAR

MEA

SURE

S O

F C

ORR

UPT

ION

Tab

le 1

: Pop

ula

r M

easu

res

of C

orru

ptio

n

Sub-

regi

ons

/T

he W

orld

Ban

k’s

cont

rol o

fIC

RG

cor

rupt

ion

scor

ebT

I’s

corr

upti

on p

erce

ptio

ns in

dex

Cou

ntri

esco

rrup

tion

ind

ex (

CC

I)a

(CP

I)c

1996

2000

2005

2006

1996

2000

2005

2006

1996

2000

2005

2007

Eas

t A

sia

Bru

nei

Dar

ussa

lam

0.37

0.35

0.25

0.24

4.00

3.00

2.50

2.50

....

....

Cam

bodi

a–1

.11

–0.9

1–1

.12

–1.1

9..

....

....

..2.

292.

00C

hin

a–0

.09

–0.3

6–0

.68

–0.5

32.

001.

082.

001.

882.

403.

103.

223.

50H

ong

Kon

g,1.

531.

311.

691.

715.

003.

254.

004.

007.

017.

708.

308.

30C

hin

a (S

AR

)In

don

esia

–0.5

5–1

.01

–0.8

7–0

.77

3.00

1.92

1.00

2.33

2.70

1.70

2.23

2.30

Japa

n1.

211.

241.

251.

315.

003.

003.

503.

507.

056.

407.

307.

50K

orea

, Rep

. of

0.52

0.14

0.47

0.31

5.00

3.00

2.50

2.50

5.02

4.00

5.00

5.10

Kor

ea, D

PR

–0.3

3–1

.93

–1.3

6–1

.69

2.50

2.00

1.00

1.00

....

....

Lao

PD

R–1

.00

–0.9

0–1

.08

–1.0

5..

....

....

..3.

271.

90M

acao

, Chi

na

(SA

R)

..0.

450.

550.

41..

....

....

....

5.70

Mal

aysi

a0.

490.

390.

250.

384.

003.

002.

422.

385.

304.

805.

055.

10M

ongo

lia

0.37

–0.3

1–0

.57

–0.5

44.

003.

002.

002.

00..

..3.

003.

00M

yan

mar

–1.2

1–1

.37

–1.5

4–1

.68

1.83

1.00

1.00

1.00

....

1.80

1.40

Phi

lipp

ines

–0.4

7–0

.50

–0.5

9–0

.69

3.00

2.42

2.00

2.00

2.70

2.80

2.50

2.50

Sin

gapo

re2.

252.

252.

252.

304.

004.

004.

504.

508.

809.

109.

409.

30T

haila

nd

–0.3

9–0

.13

–0.2

2–0

.26

3.00

2.25

1.50

1.50

3.30

3.20

3.81

3.30

Tim

or-L

este

....

–0.7

9–0

.89

....

....

....

..2.

60V

iet

Nam

–0.6

7–0

.72

–0.7

6–0

.66

3.00

2.00

1.50

2.46

..2.

502.

582.

60

Sou

th a

nd

Wes

t A

sia

Afg

han

ista

n..

–1.9

1–1

.48

–1.4

7..

....

....

..2.

501.

80B

angl

ades

h–0

.49

–0.9

3–1

.23

–1.2

92.

002.

001.

501.

502.

30–

1.68

2.00

Bhu

tan

..0.

560.

870.

89..

....

....

....

5.00

Indi

a–0

.36

–0.3

3–0

.33

–0.2

13.

003.

002.

502.

502.

602.

802.

913.

50Ir

an, I

slam

ic R

ep. o

f–0

.90

–0.5

1–0

.50

–0.5

94.

004.

002.

002.

00..

..2.

902.

50M

aldi

ves

..–0

.14

–0.3

2–0

.51

....

....

....

..3.

30N

epal

–0.3

1–0

.43

–0.7

3–0

.75

....

....

....

2.48

2.50

Paki

stan

–1.0

4–0

.76

–1.0

3–0

.93

2.00

2.00

1.50

1.50

1.00

..2.

092.

40Sr

i L

anka

–0.2

7–0

.18

–0.3

0–0

.29

3.58

4.00

2.50

2.50

....

3.16

3.20


Con

td...

Sub-

regi

ons

/T

he W

orld

Ban

k’s

cont

rol o

fIC

RG

cor

rupt

ion

scor

ebT

I’s

corr

upti

on p

erce

ptio

ns in

dex

Cou

ntri

esco

rrup

tion

ind

ex (

CC

I)a

(CP

I)c

1996

2000

2005

2006

1996

2000

2005

2006

1996

2000

2005

2007

Pac

ific

Aus

tral

ia1.

851.

961.

971.

995.

005.

005.

004.

638.

608.

308.

808.

60C

ook

Isla

nds

..–0

.10

0.63

0.66

....

....

....

....

Fij

i..

0.15

–0.6

0–0

.35

....

....

....

4.00

..K

irib

ati

..–0

.22

0.22

0.08

....

....

....

..3.

30M

arsh

all I

slan

ds..

–0.6

8–0

.44

–0.5

3..

....

....

....

..M

icro

nes

ia, F

ed. S

ts.

..–0

.32

–0.2

8–0

.27

....

....

....

..–

Nau

ru..

....

....

....

....

....

..N

ew Z

eala

nd

2.28

2.16

2.25

2.38

5.50

5.00

5.50

5.50

9.40

9.40

9.60

9.40

Niu

e..

....

....

....

....

....

..Pa

lau

....

....

....

....

....

....

Papu

a N

ew G

uin

ea–0

.31

–0.7

8–1

.12

–1.1

33.

002.

081.

001.

00..

..2.

302.

00Sa

moa

..–0

.02

0.17

0.22

....

....

....

....

Solo

mon

Isla

nds

..–0

.98

0.02

–0.2

9..

....

....

....

2.80

Tok

elau

....

....

....

....

....

....

Ton

ga..

–0.5

8–1

.29

–1.2

9..

....

....

....

1.70

Tuv

alu

..0.

11–0

.09

–0.0

7..

....

....

....

..V

anua

tu..

–0.8

50.

260.

20..

....

....

....

3.10

Not

es:

CC

I va

lues

ran

ge b

etw

een

–2.5

to

2.5;

hig

her

valu

es r

epre

sent

gre

ater

con

trol

of

corr

upti

on.

ICR

G v

alue

s ra

nge

betw

een

0 to

6;

high

er v

alue

sre

pres

ent

low

pot

enti

al r

isk

of c

orru

ptio

n. C

PI v

alue

s ra

nge

betw

een

0 an

d 10

; hi

gher

val

ues

repr

esen

t lo

w p

erce

ptio

n of

cor

rupt

ion.

Sour

ces:

(a)

Wor

ld B

ank

2007

a; (

b) T

he P

RS

(Pol

itic

al R

isk

Serv

ices

) G

roup

200

7; (

c) T

I (T

rans

pare

ncy

Inte

rnat

iona

l) 2

007a


Con

td...

Tab

le 2

: Cor

rupt

ion

(P

erce

ptio

ns)

in P

ubl

ic I

nst

itu

tion

s, M

edia

an

d N

GO

s

Sub

-reg

ions

/P

olic

eL

egal

sys

tem

/T

axM

edic

alE

duca

tion

Uti

liti

esR

egis

try

Med

iaN

GO

sC

ount

ries

Judi

ciar

yre

venu

ese

rvic

essy

stem

and

perm

it

2004

2006

2004

2006

2004

2006

2004

2006

2004

2006

2004

2006

2004

2006

2004

2006

2004

2006

Eas

t A

sia

Bru

nei

Dar

ussa

lam

....

....

....

....

....

....

....

....

....

Cam

bodi

a..

....

....

....

....

....

....

....

....

..C

hin

a..

....

....

....

....

....

....

....

....

..H

ong

Kon

g,3.

03.

42.

52.

62.

12.

32.

12.

62.

22.

62.

02.

41.

82.

23.

03.

72.

43.

4C

hina

(SA

R)

Indo

nesi

a4.

24.

24.

24.

24.

03.

43.

03.

03.

23.

33.

12.

93.

73.

62.

62.

82.

42.

9Ja

pan

3.9

3.6

3.1

3.0

3.4

3.2

3.7

3.6

3.1

3.1

3.0

3.0

2.6

2.7

3.3

3.4

2.9

3.0

Kor

ea,

Rep

. of

3.8

3.3

3.6

3.5

3.4

3.3

3.4

3.1

3.5

3.3

2.5

2.4

2.5

2.4

3.6

3.5

2.8

2.9

Kor

ea,

DPR

....

....

....

....

....

....

....

....

....

Lao

PDR

....

....

....

....

....

....

....

....

....

Mac

ao,

Chi

na..

....

....

....

....

....

....

....

....

..(S

AR

)M

alay

sia

3.8

3.8

2.9

2.8

2.6

2.5

2.2

2.1

2.3

2.2

2.2

2.2

3.2

3.1

2.4

2.4

2.4

2.2

Mon

golia

....

....

....

....

....

....

....

....

....

Mya

nmar

....

....

....

....

....

....

....

....

....

Phi

lippi

nes

4.2

3.9

3.6

3.4

3.8

3.7

3.2

2.9

3.3

3.0

3.3

2.9

3.6

3.2

2.8

2.5

2.9

2.6

Sin

gapo

re1.

71.

91.

72.

01.

61.

81.

61.

81.

61.

81.

51.

81.

51.

82.

02.

22.

22.

5T

haila

nd3.

62.

6..

2.8

..2.

32.

82.

62.

42.

8..

2.7

Tim

or-L

este

....

....

....

....

....

....

....

....

....

Vie

t N

am..

....

....

....

....

....

....

....

....

..

Sou

th a

nd

Wes

t A

sia

Afg

han

ista

n3.

0..

3.4

..3.

0..

2.8

..2.

5..

3.0

..2.

9..

2.6

..2.

9..

Ban

glad

esh

....

....

....

....

....

....

....

....

....

Bhu

tan

....

....

....

....

....

....

....

....

....

Indi

a4.

54.

34.

03.

43.

43.

03.

83.

13.

83.

13.

52.

83.

73.

32.

72.

42.

72.

9

Iran

, Is

lam

ic..

....

....

....

....

....

....

....

....

..R

ep.

of

Mal

dive

s..

....

....

....

....

....

....

....

....

..

Nep

al..

....

....

....

....

....

....

....

....

..

Paki

stan

4.4

4.4

4.1

3.8

4.0

3.9

3.8

3.4

3.6

3.1

3.8

3.8

3.9

3.9

3.5

3.6

3.3

3.4

Sri

Lank

a..

....

....

....

....

....

....

....

....

..


Con

td...

Sub

-reg

ions

/P

olic

eL

egal

sys

tem

/T

axM

edic

alE

duca

tion

Uti

liti

esR

egis

try

Med

iaN

GO

sC

ount

ries

Judi

ciar

yre

venu

ese

rvic

essy

stem

and

perm

it

2004

2006

2004

2006

2004

2006

2004

2006

2004

2006

2004

2006

2004

2006

2004

2006

2004

2006

Pac

ific

Aus

tral

ia..

....

....

....

....

....

....

....

....

..

Coo

k Is

land

s..

....

....

....

....

....

....

....

....

..

Fij

i..

3.2

..3.

2..

3.3

..3.

1..

3.0

..3.

3..

3.0

..2.

7..

2.2

Kir

ibat

i..

....

....

....

....

....

....

....

....

..

Mar

shal

l Is

land

s..

....

....

....

....

....

....

....

....

..

Mic

ron

esia

,..

....

....

....

....

....

....

....

....

..Fe

d. S

ts.

Nau

ru..

....

....

....

....

....

....

....

....

..

New

Zea

lan

d..

....

....

....

....

....

....

....

....

..

Niu

e..

....

....

....

....

....

....

....

....

..

Pala

u..

....

....

....

....

....

....

....

....

..

Papu

a N

ew G

uine

a..

....

....

....

....

....

....

....

....

..

Sam

oa..

....

....

....

....

....

....

....

....

..

Solo

mon

Isl

ands

....

....

....

....

....

....

....

....

....

Tok

elau

....

....

....

....

....

....

....

....

....

Ton

ga..

....

....

....

....

....

....

....

....

..

Tuv

alu

....

....

....

....

....

....

....

....

....

Van

uatu

....

....

....

....

....

....

....

....

....

Not

es: T

I’s

Glo

bal

Cor

rupt

ion

Bar

omet

er m

easu

res

peop

le’s

per

cept

ion

of c

orru

ptio

n in

dif

fere

nt s

ecto

rs/p

ublic

ins

titu

tion

s on

a s

cale

1 t

o 5.

1 =

Not

at a

ll co

rrup

t; 5

= E

xtre

mel

y co

rrup

t.

Sour

ce:

TI

(Tra

nspa

renc

y In

tern

atio

nal)

200

7b.


Table 3: Bribe Paying and Impact of Corruption (Perceptions)

Sub-regions/Countries Bribe paying in the past year Impact of corruption on(% of sample persons)1

Political life business environment Personal andfamily life

2004 2006 2004 2006 2004 2006 2004 2006

East Asia

Brunei Darussalam .. .. .. .. .. .. .. ..Cambodia .. .. .. .. .. .. .. ..China .. .. .. .. .. .. .. ..Hong Kong, 1.0 6.0 2.9 3.4 2.6 3.2 2.2 2.8China (SAR)

Indonesia 13.0 18.0 3.2 3.4 3.1 3.2 2.6 2.9Japan 1.0 3.0 2.3 3.1 2.2 2.7 1.8 1.9Korea, Rep. of 6.0 2.0 3.5 3.7 3.4 3.6 3.0 3.0Korea, DPR .. .. .. .. .. .. .. ..Lao PDR .. .. .. .. .. .. .. ..Macao, China (SAR) .. .. .. .. .. .. .. ..Malaysia 3.0 3.0 3.0 2.9 2.9 2.7 1.6 1.6Mongolia .. .. .. .. .. .. .. ..Myanmar .. .. .. .. .. .. .. ..Philippines 21.0 16.0 3.3 3.4 3.2 3.4 3.2 3.4Singapore 1.0 1.0 2.2 2.9 2.3 3.0 1.7 2.2Thailand .. 10.0 .. 3.0 .. 3.0 .. 2.7Timor-Leste .. .. .. .. .. .. .. ..Viet Nam .. .. .. .. .. .. .. ..

South and West Asia

Afghanistan .. .. 2.4 .. 2.4 .. 2.0 ..Bangladesh .. .. .. .. .. .. .. ..Bhutan .. .. .. .. .. .. .. ..India 16.0 12.0 2.9 2.9 2.9 2.6 2.9 2.3Iran, Islamic Rep. of .. .. .. .. .. .. .. ..Maldives .. .. .. .. .. .. .. ..Nepal .. .. .. .. .. .. .. ..Pakistan 19.0 15.0 2.9 3.1 2.9 2.9 2.8 2.4Sri Lanka .. .. .. .. .. .. .. ..

Pacific

Australia .. .. .. .. .. .. .. ..Cook Islands .. .. .. .. .. .. .. ..Fiji .. 3.0 .. 3.1 .. 3.0 .. 2.5Kiribati .. .. .. .. .. .. .. ..Marshall Islands .. .. .. .. .. .. .. ..Micronesia, Fed. Sts. .. .. .. .. .. .. .. ..Nauru .. .. .. .. .. .. .. ..New Zealand .. .. .. .. .. .. .. ..Niue .. .. .. .. .. .. .. ..Palau .. .. .. .. .. .. .. ..Papua New Guinea .. .. .. .. .. .. .. ..Samoa .. .. .. .. .. .. .. ..Solomon Islands .. .. .. .. .. .. .. ..Tokelau .. .. .. .. .. .. .. ..Tonga .. .. .. .. .. .. .. ..Tuvalu .. .. .. .. .. .. .. ..Vanuatu .. .. .. .. .. .. .. ..

Notes: 1 Transparency International’s Global Corruption Barometer (GCB) reflects the findings of survey of ordinary people.The GCB 2006 survey covers 59,661 people in 62 countries and GCB 2004 survey covers over 50,000 people in 64 countries.Impact of corruption: The values of the indicators vary between 1 and 4. [1 = Not at all; 4 = to a large extent]

Source: TI (Transparency International) 2007b.


Con

td...

POLI

TIC

AL

ECO

NO

MY

POLI

TIC

AL

ECO

NO

MY

POLI

TIC

AL

ECO

NO

MY

POLI

TIC

AL

ECO

NO

MY

POLI

TIC

AL

ECO

NO

MY

Tab

le 4

: Pol

itic

al E

con

omy

– P

olit

ical

Cli

mat

e

Sub-

regi

ons/

Ext

ent

of d

emoc

racy

aD

urab

ilit

y of

cur

rent

pol

itic

alM

ilit

ary

in p

olit

icsb

Cou

ntri

esre

gim

ea (ye

ars)

1990

1995

2000

2004

1990

1995

2000

2004

1990

1995

2000

2006

Eas

t A

sia

Bru

nei

Dar

ussa

lam

....

....

....

....

5.0

5.0

5.0

5.0

Cam

bodi

a1

12

20

22

6..

....

..C

hin

a–7

–7–7

–741

4651

552.

02.

02.

03.

0H

ong

Kon

g,..

....

....

....

..6.

06.

03.

05.

0C

hina

(SA

R)

Indo

nesi

a–7

–76

823

281

50.

32.

01.

82.

5Ja

pan

1010

1010

3843

4852

6.0

6.0

6.0

5.0

Kor

ea,

Rep

. of

66

88

27

1216

4.9

5.0

5.0

4.0

Kor

ea,

DPR

–9–9

–9–9

4247

5256

2.0

1.0

1.0

1.0

Lao

PDR

–7–7

–7–7

1520

2529

....

....

Mac

ao,

Chi

na (

SAR

)..

....

....

....

....

....

..M

alay

sia

43

33

1924

2933

5.0

5.0

5.0

5.0

Mon

golia

29

1010

03

812

5.0

5.0

5.0

5.0

Mya

nmar

–7–7

–7–8

2732

3741

1.0

0.0

0.0

0.5

Phi

lippi

nes

88

88

38

1317

1.0

3.0

4.0

3.5

Sin

gapo

re–2

–2–2

–225

3035

396.

06.

06.

05.

0T

haila

nd3

99

912

38

121.

03.

04.

03.

9T

imor

-Les

te..

....

6..

....

2..

....

..V

iet

Nam

–7–7

–7–7

3641

4650

2.2

2.0

2.0

3.0

Sou

th a

nd

Wes

t A

sia

Afg

han

ista

n–8

0–7

..10

04

0..

....

..B

angl

ades

h–5

66

68

49

131.

03.

03.

02.

9B

huta

n–8

–8–8

–883

8893

97..

....

..In

dia

89

99

4045

5054

4.0

5.0

3.0

4.0

Iran

, Is

lam

ic R

ep.

of–6

–63

–68

133

04.

05.

05.

05.

0M

aldi

ves

....

....

....

....

....

....

Nep

al5

56

–60

510

2..

....

..Pa

kist

an8

8–6

–52

71

50.

01.

00.

01.

0Sr

i La

nka

55

55

4247

5256

5.0

4.4

2.0

2.0


Con

td...

Sub-

regi

ons/

Ext

ent

of d

emoc

racy

aD

urab

ilit

y of

cur

rent

pol

itic

alM

ilit

ary

in p

olit

icsb

Cou

ntri

esre

gim

ea (ye

ars)

1990

1995

2000

2004

1990

1995

2000

2004

1990

1995

2000

2006

Pac

ific

Aus

tral

ia10

1010

1089

9499

103

6.0

6.0

6.0

6.0

Coo

k Is

land

s..

....

....

....

....

....

..F

iji

55

56

05

03

....

....

Kir

ibat

i..

....

....

....

....

....

..M

arsh

all

Isla

nds

....

....

....

....

....

....

Mic

rone

sia,

Fed

. St

s...

....

....

....

....

....

..N

auru

....

....

....

....

....

....

New

Zea

lan

d10

1010

1011

311

812

312

76.

06.

06.

06.

0N

iue

....

....

....

....

....

....

Pala

u..

....

....

....

....

....

..Pa

pua

New

Gui

nea

1010

1010

1520

2529

5.0

4.0

3.0

4.5

Sam

oa..

....

....

....

....

....

..So

lom

on I

slan

ds8

80

812

170

0..

....

..T

okel

au..

....

....

....

....

....

..T

onga

....

....

....

....

....

....

Tuv

alu

....

....

....

....

....

....

Van

uatu

....

....

....

....

....

....

Not

es:

Ext

ent

of D

emoc

racy

: T

he v

alue

s va

ry b

etw

een

–10

(str

ongl

y au

tocr

atic

) to

+10

(st

rong

ly d

emoc

rati

c).

Dur

abil

ity

of c

urre

nt p

olit

ical

reg

ime:

Doe

s no

t im

ply

chan

ge i

n th

e po

litic

al p

arty

in

pow

er b

ut t

he n

umbe

r of

yea

rs s

ince

the

las

t su

bsta

ntiv

e ch

ange

in

auth

orit

y ch

arac

teri

stic

s. T

he f

irst

yea

r of

the

new

reg

ime

is g

iven

the

val

ue=

0. E

ach

subs

eque

nt y

ear

adds

one

.M

ilit

ary

in P

olit

ics:

Val

ues

vary

bet

wee

n 0

and

6. L

ower

sco

res

indi

cate

a g

reat

er d

egre

e of

mili

tary

par

tici

pati

on i

n po

litic

s an

d a

high

er l

evel

of

polit

ical

ris

k.

Sour

ces:

(a)

Uni

vers

ity

of M

aryl

and

2004

; (b

) T

he P

RS

(Pol

itic

al R

isk

Serv

ices

) G

roup

200

7.


Con

td...

Tab

le 5

: Pol

itic

al E

con

omy

– G

over

nan

ce C

lim

ate

Sub-

regi

ons/

Pol

itic

al s

tabi

lity

aG

over

nmen

tG

over

nmen

t st

abil

ityb

Dem

ocra

tic

acco

unta

bili

tyb

Bur

eauc

racy

qua

lity

b

Cou

ntri

esef

fect

iven

essa

1996

2000

2006

1996

2000

2006

1990

1995

2000

2006

1990

1995

2000

2006

1990

1995

2000

2006

Eas

t A

sia

Bru

nei

Dar

ussa

lam

1.1

1.2

1.2

1.1

0.9

0.7

10.0

10.0

10.8

11.5

2.0

1.0

0.0

0.5

3.5

3.5

3.0

3.2

Cam

bodi

a–1

.4–0

.8–0

.5–1

.1–0

.8–1

.0..

....

....

....

....

....

..

Chi

na

–0.3

–0.1

–0.4

0.2

0.0

0.0

4.0

7.7

12.0

11.0

3.3

2.0

1.0

1.0

2.0

2.7

2.0

2.0

Hon

g K

ong,

0.0

0.8

1.2

1.2

1.1

1.8

1.3

5.8

11.0

9.6

2.7

4.0

1.3

2.5

2.0

3.5

3.0

3.0

Chi

na (

SAR

)

Indo

nesi

a–0

.8–1

.8–1

.20.

1–0

.5–0

.45.

87.

08.

67.

13.

03.

04.

05.

00.

02.

03.

02.

0

Japa

n0.

91.

11.

11.

31.

11.

37.

35.

79.

49.

16.

06.

05.

05.

04.

04.

04.

04.

0

Kor

ea,

Rep

. of

0.1

0.1

0.4

0.9

0.8

1.1

8.7

6.0

9.3

6.2

2.0

4.7

6.0

6.0

3.0

3.5

3.0

3.0

Kor

ea,

DPR

–1.8

–0.1

–0.2

–0.9

–1.9

–1.7

4.1

4.8

11.0

8.5

3.0

2.0

0.0

0.0

2.0

1.0

0.0

0.0

Lao

PDR

1.0

–0.7

–0.1

–0.1

–0.8

–0.9

....

....

....

....

....

....

Mac

ao,

Chi

na..

0.4

1.0

..0.

61.

0..

....

....

....

....

....

..(S

AR

)

Mal

aysi

a0.

60.

20.

30.

80.

81.

06.

39.

011

.09.

95.

04.

02.

14.

52.

02.

03.

03.

0

Mon

golia

0.6

0.8

0.8

–0.5

–0.3

–0.5

5.4

6.0

9.9

7.5

2.0

2.0

4.4

4.0

1.4

2.0

2.0

2.0

Mya

nmar

–1.3

–1.6

–0.7

–1.3

–1.2

–1.6

1.0

7.3

11.2

9.5

1.0

1.0

0.0

0.0

0.0

1.0

1.0

1.0

Phi

lippi

nes

–0.5

–0.8

–1.3

0.0

–0.2

0.0

1.0

7.5

8.9

5.7

3.8

4.0

5.0

5.0

0.0

1.0

3.0

3.0

Sin

gapo

re1.

11.

21.

32.

32.

32.

28.

18.

011

.011

.03.

03.

02.

02.

03.

53.

54.

04.

0

Tha

iland

0.0

0.4

–1.0

0.4

0.1

0.3

5.8

5.2

10.0

8.6

3.0

3.4

4.0

4.5

3.5

3.5

2.0

2.0

Tim

or-L

este

..0.

3–1

.0..

..–0

.7..

....

....

....

....

....

..

Vie

t N

am0.

30.

30.

4–0

.2–0

.4–0

.46.

07.

411

.010

.52.

93.

01.

01.

01.

02.

02.

02.

0

Sou

th a

nd

Wes

t A

sia

Afg

han

ista

n–2

.1–2

.7–2

.3..

–2.1

–1.4

....

....

....

....

....

....

Ban

glad

esh

–0.9

–0.5

–1.6

–0.6

–0.5

–0.8

2.2

3.0

8.3

9.3

2.0

3.0

5.0

3.0

0.0

1.0

2.0

2.0

Bhu

tan

0.8

0.5

1.3

0.2

0.8

0.3

....

....

....

....

....

....

Indi

a–1

.1–0

.7–0

.8–0

.2–0

.10.

03.

05.

310

.17.

73.

35.

06.

06.

03.

03.

03.

03.

0

Iran

, Is

lam

ic–0

.7–0

.3–1

.3–0

.8–0

.3–0

.86.

86.

09.

39.

52.

04.

03.

34.

51.

03.

02.

02.

0R

ep.

of

Mal

dive

s0.

21.

10.

8–0

.10.

50.

0..

....

....

....

....

....

..

Nep

al–0

.6–1

.2–2

.3–0

.3–0

.4–0

.9..

....

....

....

....

....

..

Paki

stan

–1.5

–0.9

–1.9

–0.5

–0.6

–0.5

2.2

7.0

10.8

9.0

2.0

4.0

0.0

1.0

2.0

2.0

2.0

2.0

Sri

Lank

a–2

.1–1

.6–1

.6–0

.4–0

.3–0

.41.

87.

09.

07.

54.

05.

04.

54.

02.

02.

02.

02.

0


Con

td...

Sub-

regi

ons/

Pol

itic

al s

tabi

lity

aG

over

nmen

tG

over

nmen

t st

abil

ityb

Dem

ocra

tic

acco

unta

bili

tyb

Bur

eauc

racy

qua

lity

b

Cou

ntri

esef

fect

iven

essa

1996

2000

2006

1996

2000

2006

1990

1995

2000

2006

1990

1995

2000

2006

1990

1995

2000

2006

Pac

ific

Aus

tral

ia1.

11.

20.

91.

41.

81.

96.

67.

610

.910

.36.

06.

06.

06.

04.

04.

04.

04.

0C

ook

Isla

nds

....

....

0.1

0.1

....

....

....

....

....

....

Fij

i0.

80.

00.

1–0

.1–0

.4–0

.1..

....

....

....

....

....

..K

irib

ati

....

1.4

–0.3

–0.1

–0.5

....

....

....

....

....

....

Mar

shal

l Is

land

s..

..1.

1..

–0.9

–1.1

....

....

....

....

....

....

Mic

ron

esia

,..

..1.

1..

–0.7

–0.2

....

....

....

....

....

....

Fed.

Sts

.N

auru

....

1.1

....

–1.3

....

....

....

....

....

....

New

Zea

lan

d1.

11.

21.

32.

21.

61.

94.

16.

510

.36.

16.

06.

06.

06.

04.

04.

04.

04.

0N

iue

....

....

..–0

.6..

....

....

....

....

....

..Pa

lau

....

1.1

....

–0.6

....

....

....

....

....

....

Papu

a N

ew G

uine

a–1

.4–0

.5–0

.8–0

.3–0

.6–0

.83.

66.

09.

86.

75.

05.

03.

94.

53.

03.

02.

02.

0Sa

moa

1.0

1.1

1.1

–0.4

0.4

0.1

....

....

....

....

....

....

Solo

mon

Isl

ands

1.0

–0.9

0.2

–1.0

–1.1

–0.9

....

....

....

....

....

....

Tok

elau

....

....

....

....

....

....

....

....

....

Ton

ga..

..0.

7–0

.2–0

.5–0

.6..

....

....

....

....

....

..T

uval

u..

..1.

4..

0.5

–0.3

....

....

....

....

....

....

Van

uatu

1.0

1.1

1.4

–0.2

–0.6

–0.4

....

....

....

....

....

....

Not

es:

Pol

itic

al S

tabi

lity

: In

dex

valu

es v

ary

betw

een

–2.5

to

2.5.

Hig

her

valu

es c

orre

spon

d to

low

er l

ikel

ihoo

d of

des

tabi

lizat

ion

of g

over

nmen

t.G

over

nmen

t E

ffec

tive

ness

: In

dex

valu

es v

ary

betw

een

–2.

5 to

2.5

. H

ighe

r va

lues

cor

resp

ond

to b

ette

r pu

blic

ser

vice

s an

d gr

eate

r cr

edib

ility

of

gove

rnm

ent.

Gov

ernm

ent

Stab

ilit

y: V

alue

s va

ry b

etw

een

0 an

d 12

. H

ighe

r va

lues

ind

icat

e gr

eate

r go

vern

men

t st

abili

ty.

Dem

ocra

tic

Acc

ount

abil

ity:

Val

ues

vary

bet

wee

n 0

and

6. H

ighe

r va

lues

ind

icat

e gr

eate

r re

spon

sive

ness

of

gove

rnm

ent

to i

ts p

eopl

e.B

urea

ucra

cy Q

uali

ty:

Valu

es v

ary

betw

een

0 an

d 4.

Hig

her

valu

es i

ndic

ate

bett

er b

urea

crac

y.

Sour

ces:

(a)

Wor

ld B

ank

2007

a; (

b) T

he P

RS

(Pol

itic

al R

isk

Serv

ices

) G

roup

200

7.


Table 6: Political Economy – Voice and Choice, Legal Climate

Sub-regions/Countries Voice and accountabilitya Rule of lawa Law and orderb

1996 2000 2006 1996 2000 2006 1990 1995 2000 2006

East Asia

Brunei Darussalam –1.1 –0.7 –1.1 0.6 0.6 0.3 4.0 5.9 6.0 5.0Cambodia –0.8 –0.5 –1.0 –1.1 –0.9 –1.1 .. .. .. ..China –1.4 –1.6 –1.7 –0.2 –0.4 –0.4 3.0 5.0 4.8 4.5Hong Kong, China (SAR) 0.2 –0.1 0.6 1.1 0.9 1.4 4.0 6.0 5.0 5.0Indonesia –1.2 –0.5 –0.2 –0.4 –0.8 –0.8 2.0 4.7 2.0 3.0Japan 0.9 0.9 0.9 1.5 1.4 1.4 5.0 6.0 5.1 5.0Korea, Rep. of 0.5 0.6 0.7 0.7 0.7 0.7 2.0 5.0 4.0 5.0Korea, DPR –2.0 –2.1 –2.2 –1.2 –0.8 –1.3 2.0 4.9 5.0 5.0Lao PDR –1.2 –1.5 –1.6 –1.6 –0.9 –0.9 .. .. .. ..Macao, China (SAR) .. 0.2 0.4 .. 0.2 0.5 .. .. .. ..Malaysia –0.1 –0.4 –0.3 0.7 0.4 0.6 3.0 5.0 3.0 4.0Mongolia 0.3 0.7 0.1 0.1 0.0 –0.3 2.5 4.0 4.0 4.0Myanmar –2.1 –2.1 –2.3 –1.3 –1.3 –1.4 2.0 4.9 3.0 3.0Philippines 0.1 0.3 –0.2 0.0 –0.5 –0.5 1.0 4.0 3.1 2.5Singapore –0.1 0.1 –0.1 1.8 1.4 1.8 5.0 6.0 6.0 5.0Thailand 0.0 0.3 –0.5 0.5 0.4 0.0 4.0 5.0 5.0 2.5Timor-Leste .. –0.1 –0.3 .. .. –1.2 .. .. .. ..Viet Nam –1.4 –1.6 –1.5 –0.6 –0.5 –0.4 3.1 5.0 5.0 4.0

South and West Asia

Afghanistan –1.7 –2.0 –1.3 –1.3 –2.0 –2.0 .. .. .. ..Bangladesh –0.4 –0.4 –0.5 –0.8 –0.8 –0.9 1.0 3.0 2.1 2.5Bhutan –1.5 –1.7 –1.0 –1.3 0.2 0.6 .. .. .. ..India 0.2 0.4 0.3 0.3 0.2 0.2 1.1 4.0 4.0 4.0Iran, Islamic Rep. of –1.3 –0.9 –1.3 –1.0 –0.4 –0.8 1.0 5.0 5.0 4.0Maldives –1.1 –1.0 –1.0 .. 0.3 0.2 .. .. .. ..Nepal 0.1 –0.2 –1.2 –0.1 –0.3 –0.7 .. .. .. ..Pakistan –1.1 –1.6 –1.2 –0.6 –0.8 –0.8 1.1 3.0 3.0 3.0Sri Lanka –0.3 –0.4 –0.4 –0.1 0.0 0.0 0.0 3.7 3.0 3.0

Pacific

Australia 1.3 1.5 1.5 1.8 1.7 1.8 6.0 6.0 6.0 5.5Cook Islands .. .. .. .. 0.9 1.1 .. .. .. ..Fiji –0.1 0.0 –0.4 0.2 –0.6 –0.1 .. .. .. ..Kiribati 1.2 1.1 0.5 .. 0.4 0.8 .. .. .. ..Marshall Islands 1.3 1.2 1.2 .. –0.5 –0.2 .. .. .. ..Micronesia, Fed. Sts. 1.2 0.9 1.0 .. –0.4 0.7 .. .. .. ..Nauru 1.0 0.8 1.1 .. .. 0.7 .. .. .. ..New Zealand 1.6 1.7 1.6 2.0 1.8 1.9 6.0 6.0 6.0 5.5Niue .. .. .. .. .. .. .. .. .. ..Palau 1.1 1.1 1.2 .. .. 0.7 .. .. .. ..Papua New Guinea 0.1 0.0 –0.1 –0.6 –0.9 –0.9 3.1 3.0 2.1 2.5Samoa 0.7 0.7 0.5 –0.2 0.7 0.9 .. .. .. ..Solomon Islands 1.1 0.0 0.1 .. –1.7 –0.9 .. .. .. ..Tokelau .. .. .. .. .. .. .. .. .. ..Tonga –0.1 –0.1 –0.1 .. –0.1 0.5 .. .. .. ..Tuvalu 1.4 1.3 0.7 .. 1.7 1.1 .. .. .. ..Vanuatu 0.6 0.6 0.5 .. –0.2 0.5 .. .. .. ..

Notes: Voice and Accountability: Index values vary between –2.5 to 2.5. Higher values correspond to greater freedom to citizensin exercising their right to select government and greater freedom of media.Rule of Law: Index values vary between –2.5 to 2.5. Higher values correspond to greater confidence of citizens in rule of law.Law and Order: Values vary between 0 and 6. Higher values indicate greater strength and implementation of legal system.

Sources: (a) World Bank 2007a; (b) The PRS (Political Risk Services) Group 2007.


Con

td...

Tab

le 7

: Pol

itic

al E

con

omy

– E

con

omic

Cli

mat

e

Sub-

regi

ons/

Cou

ntri

esR

egul

ator

y qu

alit

yaG

ener

al g

over

nmen

tSu

bsid

ies

and

othe

rP

ubli

cH

ighe

stH

ighe

stfi

nal

cons

umpt

ion

tran

sfer

s (%

of

expe

ndit

ure

mar

gina

lm

argi

nal

expe

ndit

ure

gove

rnm

ent

onta

x ra

te,

tax

rate

,(%

of

GD

P)b

expe

ndit

ure)

b(%

of

GD

P)

corp

orat

ion

indi

vidu

al

Hea

lthc

Edu

ca-

rate

(%

)bra

te (

%)b

tion

c

1996

2000

2006

1995

2000

2005

1995

2000

2004

2003

2002

–04

2000

2004

2000

2004

Eas

t A

sia

Bru

nei

Dar

ussa

lam

3.5

0.9

1.0

....

....

....

2.8

..30

.030

.00.

00.

0C

ambo

dia

–0.3

–0.1

–0.6

5.8

5.2

4.1

....

18.2

2.1

2.0

20.0

20.0

20.0

20.0

Chi

na

–0.2

0.0

–0.2

13.8

15.8

14.1

....

63.8

2.0

..30

.0..

45.0

45.0

Hon

g K

ong,

Chi

na (

SAR

)1.

61.

71.

98.

49.

18.

8..

....

..4.

716

.017

.517

.017

.0In

done

sia

0.2

–0.4

–0.3

7.8

6.5

8.1

40.8

..63

.31.

10.

930

.030

.035

.035

.0Ja

pan

0.6

0.7

1.3

15.1

16.9

....

....

6.4

3.7

30.0

30.0

37.0

37.0

Kor

ea,

Rep

. of

0.5

0.6

0.7

11.2

12.1

14.2

62.9

53.4

50.2

2.8

4.6

28.0

27.0

40.0

36.0

Kor

ea,

DPR

–2.3

–2.2

–2.5

....

....

....

....

....

....

Lao

PDR

–1.2

–1.3

–1.1

....

....

....

1.2

2.3

....

40.0

..M

acao

, C

hina

(SA

R)

..0.

51.

19.

212

.88.

6..

9.6

14.7

....

15.0

15.0

15.0

12.0

Mal

aysi

a0.

80.

30.

712

.410

.412

.926

.938

.2..

2.2

8.0

28.0

28.0

29.0

28.0

Mon

golia

–0.7

0.3

–0.3

..18

.114

.0..

....

....

....

....

Mya

nmar

–1.1

–1.9

–2.2

....

....

....

0.5

..30

.0..

30.0

..P

hilip

pin

es0.

40.

3–0

.111

.413

.19.

7..

..17

.61.

43.

232

.032

.032

.032

.0Si

nga

pore

1.7

2.0

1.8

8.5

10.8

10.8

14.9

35.8

33.3

1.6

..25

.520

.028

.022

.0T

haila

nd0.

40.

70.

49.

911

.311

.8..

..30

.62.

04.

230

.030

.037

.037

.0T

imor

-Les

te..

..–1

.5..

35.2

49.2

....

..7.

3..

....

....

Vie

t N

am–0

.5–0

.7–0

.58.

26.

46.

2..

....

1.5

..32

.028

.0..

..

Sou

th a

nd

Wes

t A

sia

Afg

han

ista

n..

–2.7

–1.7

....

8.6

....

4.4

....

....

....

Ban

glad

esh

–0.4

–0.2

–0.9

4.6

4.6

5.5

....

29.5

1.1

2.2

....

....

Bhu

tan

0.1

0.2

–0.2

18.2

21.2

..15

.16.

88.

42.

6..

....

....

Indi

a–0

.1–0

.3–0

.110

.812

.611

.333

.2..

..1.

23.

339

.635

.930

.030

.0Ir

an,

Isla

mic

Rep

. of

–1.7

–1.5

–1.5

16.0

13.9

12.2

..24

.135

.33.

14.

854

.025

.054

.035

.0M

aldi

ves

0.2

0.0

0.3

16.8

22.9

..1.

61.

51.

75.

58.

1..

....

..N

epal

–0.3

–0.5

–0.6

9.2

8.9

10.2

....

..1.

53.

4..

....

..Pa

kist

an–0

.5–0

.8–0

.411

.78.

77.

72.

03.

225

.50.

72.

0..

41.0

35.0

35.0

Sri

Lank

a0.

40.

2–0

.111

.510

.58.

524

.021

.025

.51.

6..

35.0

30.0

35.0

30.0


Con

td...

Sub-

regi

ons/

Cou

ntri

esR

egul

ator

y qu

alit

yaG

ener

al g

over

nmen

tSu

bsid

ies

and

othe

rP

ubli

cH

ighe

stH

ighe

stfi

nal

cons

umpt

ion

tran

sfer

s (%

of

expe

ndit

ure

mar

gina

lm

argi

nal

expe

ndit

ure

gove

rnm

ent

onta

x ra

te,

tax

rate

,(%

of

GD

P)b

expe

ndit

ure)

b(%

of

GD

P)

corp

orat

ion

indi

vidu

al

Hea

lthc

Edu

ca-

rate

(%

)bra

te (

%)b

tion

c

1996

2000

2006

1995

2000

2005

1995

2000

2004

2003

2002

–04

2000

2004

2000

2004

Pac

ific

Aus

tral

ia1.

11.

61.

718

.318

.2..

..67

.371

.46.

44.

834

.030

.047

.047

.0C

ook

Isla

nds

..0.

00.

6..

....

....

....

....

....

..F

iji

–0.5

–0.9

–0.4

15.9

17.8

....

..22

.22.

36.

4..

31.0

34.0

31.0

Kir

ibat

i–0

.4–1

.0–1

.0..

....

....

....

....

....

..M

arsh

all

Isla

nds

..–0

.8–1

.0..

....

....

....

....

....

..M

icro

nesi

a, F

ed.

Sts.

..–0

.80.

1..

....

....

....

....

....

..N

auru

....

....

....

....

....

....

....

..N

ew Z

eala

nd

1.6

1.5

1.7

17.5

17.5

....

..40

.46.

36.

933

.033

.039

.039

.0N

iue

....

....

....

....

....

....

....

..Pa

lau

....

....

....

....

....

....

....

..Pa

pua

New

Gui

nea

–0.8

–0.7

–0.7

17.1

....

25.5

24.0

..3.

0..

25.0

..47

.0..

Sam

oa–0

.2–0

.10.

0..

....

....

..4.

34.

3..

....

..So

lom

on I

slan

ds–1

.3–1

.6–1

.1..

....

....

..4.

5..

30.0

30.0

40.0

40.0

Tok

elau

....

....

....

....

....

....

....

..T

onga

–0.1

–0.5

–0.8

19.0

15.1

....

....

5.5

4.8

....

....

Tuv

alu

..0.

5–0

.8..

....

....

....

....

Van

uatu

0.0

–0.7

–0.1

27.1

....

....

..2.

99.

6..

....

..

Not

es:

Reg

ulat

ory

qual

ity:

Val

ues

vary

bet

wee

n –2

.5 t

o 2.

5. H

ighe

r va

lues

ind

icat

e im

plem

enta

tion

of

soun

d po

licie

s an

d be

tter

pro

mot

ion

of p

riva

tese

ctor

. G

ener

al g

over

nmen

t fi

nal

cons

umpt

ion

expe

ndit

ure

incl

udes

all

gove

rnm

ent

curr

ent

expe

ndit

ures

for

pur

chas

es o

f go

ods

and

serv

ices

(in

clud

ing

com

pens

atio

n of

em

ploy

ees)

. It

als

o in

clud

es m

ost

expe

ndit

ures

on

nati

onal

def

ense

and

sec

urit

y, b

ut e

xclu

des

gove

rnm

ent

mili

tary

exp

endi

ture

s th

atar

e pa

rt o

f go

vern

men

t ca

pita

l ex

pend

itur

e.

Sour

ces:

(a)

Wor

ld B

ank

2007

a; (

b) W

orld

Ban

k (W

orld

Dev

elop

men

t In

dica

tors

onl

ine)

200

7b;

(c)

UN

DP

(Uni

ted

Nat

ions

Dev

elop

men

t Pr

ogra

mm

e)20

06.


SOCIO ECONOMIC INDICASOCIO ECONOMIC INDICASOCIO ECONOMIC INDICASOCIO ECONOMIC INDICASOCIO ECONOMIC INDICATTTTTORSORSORSORSORS

Table 8: Human Development Index – Trends

Sub-regions/Countries HDI

1990 1995 2000 2005

East Asia

Brunei Darussalam .. .. .. 0.894Cambodia .. 0.540 0.547 0.598China 0.634 0.691 0.732 0.777Hong Kong, China (SAR) 0.865 0.886 0.919 0.937Indonesia 0.626 0.670 0.692 0.728Japan 0.916 0.929 0.941 0.953Korea, Rep. of 0.825 0.861 0.892 0.921Korea, DPR .. .. .. ..Lao PDR 0.478 0.524 0.563 0.601Macao, China (SAR) .. .. .. ..Malaysia 0.725 0.763 0.790 0.811Mongolia 0.654 0.638 0.667 0.700Myanmar .. .. .. 0.583Philippines 0.721 0.739 0.758 0.771Singapore 0.827 0.865 .. 0.922Thailand 0.712 0.745 0.761 0.781Timor-Leste .. .. .. 0.514Viet Nam 0.620 0.672 0.711 0.733

South and West Asia

Afghanistan .. .. .. ..Bangladesh 0.422 0.453 0.511 0.547Bhutan .. .. .. 0.579India 0.521 0.551 0.578 0.619Iran, Islamic Rep. of 0.653 0.693 0.722 0.759Maldives .. .. .. 0.741Nepal 0.427 0.469 0.502 0.534Pakistan 0.467 0.497 0.516 0.551Sri Lanka 0.702 0.721 0.731 0.743

Pacific

Australia 0.894 0.934 0.949 0.962Cook Islands .. .. .. ..Fiji .. 0.743 0.747 0.762Kiribati .. .. .. ..Marshall Islands .. .. .. ..Micronesia, Fed. Sts. .. .. .. ..Nauru .. .. .. ..New Zealand 0.880 0.908 0.927 0.943Niue .. .. .. ..Palau .. .. .. ..Papua New Guinea 0.495 0.532 0.544 0.530Samoa 0.721 0.740 0.765 0.785Solomon Islands .. .. .. 0.602Tokelau .. .. .. ..Tonga .. .. .. 0.819Tuvalu .. .. .. ..Vanuatu .. .. .. 0.674

Source: UNDP (United Nations Development Programme) 2007/2008.


Con

td...

Tab

le 9

: D

emog

raph

y

Sub-

regi

ons/

Tot

al p

opul

atio

nR

ural

pop

ulat

ion

Pop

ulat

ion

ages

0–1

4P

opul

atio

n ag

es 1

5–64

Lif

e ex

pect

ancy

Cou

ntri

es(m

illio

ns)

(% o

f tot

al)

(% o

f tot

al)

(% o

f tot

al)

at b

irth

(ye

ars)

1990

1995

2000

2005

1990

1995

2000

2005

1990

1995

2000

2005

1990

1995

2000

2005

1990

1995

2000

2005

Eas

t A

sia

Bru

nei D

arus

sala

m0.

30.

30.

30.

434

.231

.428

.926

.534

.533

.031

.329

.662

.864

.465

.867

.374

.275

.376

.277

.0

Cam

bodi

a9.

711

.412

.714

.187

.485

.883

.180

.344

.546

.440

.737

.152

.750

.756

.159

.554

.355

.155

.657

.0

Chi

na11

35.2

1204

.912

62.6

1304

.572

.668

.664

.259

.627

.726

.424

.821

.466

.767

.568

.471

.068

.969

.470

.371

.8

Hon

g K

ong,

5.7

6.2

6.7

6.9

0.5

0.0

0.0

0.0

21.5

19.1

16.5

14.4

70.0

71.2

72.4

73.6

77.4

78.7

80.9

81.6

Chi

na (

SAR

)

Indo

nesi

a17

8.2

192.

820

6.3

220.

669

.464

.458

.051

.935

.833

.030

.228

.360

.462

.864

.966

.261

.764

.065

.867

.8

Japa

n12

3.5

125.

412

6.9

127.

836

.935

.434

.834

.218

.416

.014

.614

.069

.669

.568

.266

.378

.879

.581

.182

.1

Kor

ea,

Rep

. of

42.9

45.1

47.0

48.3

26.2

21.8

20.4

19.2

25.8

23.4

20.8

18.6

69.2

70.8

71.8

72.0

71.3

73.4

75.9

77.6

Kor

ea, D

PR19

.720

.921

.922

.541

.640

.939

.838

.426

.927

.226

.525

.068

.467

.967

.968

.265

.363

.863

.163

.9

Lao

PDR

4.1

4.7

5.3

5.9

84.6

82.8

81.1

79.4

43.8

43.7

42.7

40.9

52.5

52.5

53.8

55.5

....

....

Mac

ao, C

hina

0.4

0.4

0.4

0.5

0.2

0.1

0.0

0.0

25.7

26.0

22.3

16.3

67.8

67.0

70.4

76.0

76.8

78.2

79.4

80.3

(SA

R)

Mal

aysi

a17

.820

.423

.025

.350

.244

.438

.232

.736

.535

.833

.732

.459

.860

.462

.263

.070

.371

.572

.673

.7

Mon

golia

2.1

2.3

2.4

2.6

43.0

43.2

43.4

43.3

41.7

38.9

35.1

30.5

54.3

57.3

61.1

65.8

62.7

64.2

65.1

66.8

Mya

nmar

40.8

44.5

47.7

50.5

75.1

73.9

72.0

69.4

37.3

35.3

32.5

29.5

58.2

60.1

62.8

65.6

56.1

57.9

59.5

61.1

Phili

ppin

es61

.168

.475

.883

.151

.246

.041

.537

.340

.939

.437

.535

.155

.857

.359

.061

.065

.667

.769

.571

.0

Sing

apor

e3.

03.

54.

04.

30.

00.

00.

00.

021

.522

.321

.819

.572

.971

.571

.172

.074

.376

.478

.179

.7

Tha

iland

54.6

58.3

61.4

64.2

70.6

69.7

68.9

67.7

31.9

28.3

25.6

23.8

64.2

66.9

68.4

69.1

68.2

69.0

69.5

70.9

Tim

or-L

este

0.7

0.8

0.8

1.0

79.2

77.3

75.5

73.5

41.5

41.9

45.5

41.1

56.5

55.8

51.7

56.0

46.1

50.7

54.1

56.7

Vie

t N

am66

.273

.078

.583

.179

.777

.875

.773

.638

.937

.033

.529

.556

.158

.061

.165

.064

.867

.169

.170

.7

Sou

th a

nd

Wes

t A

sia

Afg

hani

stan

....

....

81.7

80.3

78.7

77.1

....

....

....

....

....

....

Ban

glad

esh

104.

011

6.5

128.

914

1.8

80.2

78.5

76.8

74.9

40.9

39.7

37.5

35.5

55.9

57.0

59.1

60.9

55.0

58.5

61.5

63.9

Bhu

tan

0.6

0.6

0.6

0.6

92.8

91.7

90.4

88.9

41.6

43.2

41.2

38.4

54.7

52.7

54.5

57.0

....

....

Indi

a84

9.5

932.

210

15.9

1094

.674

.573

.472

.371

.336

.635

.834

.132

.159

.159

.661

.062

.759

.161

.462

.963

.5

Iran

, Isl

amic

54.4

59.0

63.7

68.3

43.7

39.8

35.8

33.1

44.7

42.5

35.2

28.7

51.8

53.4

60.3

66.8

65.0

67.5

69.5

71.1

Rep

. of

Mal

dive

s0.

20.

30.

30.

374

.274

.472

.570

.446

.546

.143

.840

.750

.250

.452

.755

.860

.562

.865

.467

.6

Nep

al19

.121

.724

.427

.191

.189

.186

.684

.241

.941

.940

.939

.054

.754

.855

.657

.354

.658

.060

.562

.7

Paki

stan

108.

012

2.4

138.

115

5.8

69.4

68.2

66.9

65.1

43.6

43.7

41.3

38.3

53.0

52.8

55.0

57.9

59.1

60.9

63.0

64.9

Sri

Lank

a17

.018

.119

.419

.682

.883

.684

.384

.932

.129

.426

.224

.162

.664

.567

.268

.671

.272

.573

.674

.7


Con

td...

Sub-

regi

ons/

Tot

al p

opul

atio

nR

ural

pop

ulat

ion

Pop

ulat

ion

ages

0–1

4P

opul

atio

n ag

es 1

5–64

Lif

e ex

pect

ancy

Cou

ntri

es(m

illi

ons)

(% o

f to

tal)

(% o

f to

tal)

(% o

f to

tal)

at b

irth

(ye

ars)

1990

1995

2000

2005

1990

1995

2000

2005

1990

1995

2000

2005

1990

1995

2000

2005

1990

1995

2000

2005

Pac

ific

Aus

tral

ia17

.118

.119

.220

.314

.613

.912

.811

.821

.921

.921

.219

.666

.966

.666

.667

.777

.078

.179

.680

.6

Coo

k Is

land

s..

....

....

....

....

....

....

....

....

....

..

Fiji

0.7

0.8

0.8

0.8

58.4

54.5

51.7

49.2

37.9

35.7

33.3

31.7

59.0

61.2

63.3

64.4

66.7

66.8

67.4

68.3

Kir

ibat

i0.

10.

10.

10.

165

.063

.657

.052

.6..

....

....

....

..56

.859

.461

.9..

Mar

shal

l Isl

ands

0.0

0.1

0.1

0.1

35.3

34.7

34.2

33.3

....

....

....

....

71.0

69.1

65.2

..

Mic

rone

sia,

0.1

0.1

0.1

0.1

74.2

74.9

77.7

77.7

44.1

43.4

40.1

39.0

52.3

53.1

56.1

57.6

66.3

66.8

67.3

68.1

Fed.

Sts

.

Nau

ru..

....

....

....

....

....

....

....

....

....

..

New

Zea

land

3.4

3.7

3.9

4.1

15.3

14.7

14.3

13.8

23.4

23.0

22.9

21.3

65.5

65.3

65.2

66.4

75.4

76.7

78.6

79.6

Niu

e..

....

....

....

....

....

....

....

....

....

..

Pala

u..

....

0.02

30.4

28.6

30.4

30.4

....

....

....

....

....

....

Papu

a N

ew4.

14.

75.

35.

986

.986

.886

.886

.641

.341

.841

.540

.356

.055

.756

.157

.352

.353

.454

.756

.4G

uine

a

Sam

oa0.

20.

20.

20.

278

.878

.578

.177

.640

.939

.340

.940

.755

.256

.454

.854

.866

.368

.169

.170

.7

Solo

mon

Isl

ands

0.3

0.4

0.4

0.5

86.3

85.3

84.3

83.0

45.8

43.9

42.4

40.6

51.5

53.5

55.2

56.9

60.9

61.1

61.8

62.9

Tok

elau

....

....

....

....

....

....

....

....

....

....

Ton

ga0.

10.

10.

10.

177

.377

.176

.876

.039

.340

.037

.535

.956

.255

.157

.058

.169

.970

.871

.772

.6

Tuv

alu

....

....

....

....

....

....

....

....

....

....

Vanu

atu

0.1

0.2

0.2

0.2

81.3

79.8

78.3

76.5

43.9

43.4

42.1

39.9

52.5

53.1

54.6

56.7

63.5

65.7

67.7

69.5

Sour

ce:

Wor

ld B

ank

(Wor

ld D

evel

opm

ent

Indi

cato

rs o

nlin

e) 2

007b

.


Con

td...

Tab

le 1

0: M

acro

In

dica

tors

: G

DP,

Tra

de a

nd

Tax

Sub-

regi

ons/

GD

P p

er c

apit

aR

eal

GD

P g

row

thT

ax r

even

ueT

rade

Cou

ntri

es(c

onst

ant

2000

US

$)(a

nnua

l %

)(%

of

GD

P)

(% o

f G

DP

)

1990

1995

2000

2005

1990

1995

2000

2005

1990

1995

2000

2005

1990

1995

2000

2005

Eas

t A

sia

Bru

nei

1460

6.0

1380

3.9

1294

3.5

..2.

73.

02.

8..

....

....

....

....

Dar

ussa

lam

Cam

bodi

a..

226.

428

7.8

403.

6..

6.5

8.4

13.4

....

..8.

018

.977

.711

1.6

139.

0C

hin

a39

1.7

658.

094

9.2

1448

.83.

810

.98.

410

.24.

05.

06.

8..

34.8

43.9

44.2

69.0

Hon

g K

ong,

1900

6.5

2310

1.2

2531

9.4

3000

9.6

1.9

3.9

10.2

7.5

....

....

252.

629

0.9

282.

738

5.0

Chi

na (

SAR

)In

done

sia

612.

482

6.9

800.

094

2.5

9.0

8.4

4.9

5.7

17.8

15.0

....

49.1

54.0

71.4

61.5

Japa

n33

279.

535

321.

836

648.

739

075.

35.

21.

92.

92.

613

.4..

....

20.0

16.9

20.6

..

Kor

ea,

Rep

. of

6614

.691

59.1

1088

4.5

1323

9.5

9.2

9.2

8.5

4.2

14.4

14.2

16.1

15.7

57.0

58.7

78.5

82.2

Kor

ea,

DPR

....

....

....

....

....

....

....

....

Lao

PDR

231.

027

3.8

331.

741

4.4

6.7

7.0

5.8

7.1

....

....

36.5

60.6

64.6

58.0

Mac

ao,

Chi

na12

058.

214

547.

313

248.

622

598.

99.

83.

95.

76.

7..

..17

.222

.119

3.9

137.

817

1.4

155.

3(S

AR

)M

alay

sia

2547

.435

10.1

3927

.444

36.8

9.0

9.8

8.9

5.2

18.9

19.6

14.3

..14

7.0

192.

122

8.9

223.

2M

ongo

lia..

..39

2.5

489.

5..

..0.

57.

1..

....

....

..14

7.2

145.

8M

yanm

ar..

....

..2.

86.

99.

85.

06.

23.

83.

0..

7.5

3.1

....

Phi

lippi

nes

920.

291

5.1

1001

.911

36.2

3.0

4.7

6.0

5.0

14.1

16.3

13.7

13.0

60.8

80.5

108.

999

.3Si

nga

pore

1465

7.8

1935

0.4

2307

7.1

2596

7.8

9.2

8.2

10.1

6.6

15.4

16.4

15.4

....

....

459.

1T

haila

nd14

52.4

2057

.119

97.5

2446

.011

.29.

24.

84.

5..

....

17.2

75.8

90.4

124.

914

9.2

Tim

or-L

este

....

403.

534

4.5

....

13.7

2.3

....

....

....

....

Vie

t N

am22

6.9

305.

240

1.5

538.

75.

19.

56.

88.

4..

....

..81

.374

.711

2.5

145.

2

Sou

th a

nd

Wes

t A

sia

Afg

han

ista

n..

....

....

....

14.0

....

..3.

9..

....

68.1

Ban

glad

esh

283.

331

3.7

365.

343

2.6

5.9

4.9

5.9

6.0

....

....

19.7

28.2

33.2

39.6

Bhu

tan

508.

565

5.0

799.

110

10.2

7.7

6.1

5.5

6.5

4.4

6.7

9.9

..57

.681

.076

.483

.6In

dia

317.

237

2.5

453.

058

8.4

5.8

7.6

4.0

9.2

10.1

9.4

9.0

..15

.723

.227

.443

.6Ir

an,

Isla

mic

1292

.214

09.1

1591

.019

43.1

13.7

2.7

5.1

4.4

6.0

6.6

6.3

7.9

37.7

34.8

40.1

69.0

Rep

. of

Mal

dive

s..

1661

.321

51.3

2424

.1..

..4.

4–4

.114

.013

.613

.816

.5..

169.

916

1.1

174.

3N

epal

175.

720

0.0

224.

723

3.9

4.5

3.3

6.1

2.7

7.0

9.0

8.7

10.1

31.6

58.8

55.7

48.7

Paki

stan

461.

451

0.4

531.

059

8.5

4.5

5.0

4.3

7.3

13.3

13.2

10.2

9.5

38.9

36.1

28.4

34.8

Sri

Lank

a57

7.2

704.

484

3.6

1009

.76.

45.

56.

06.

019

.017

.814

.514

.267

.281

.688

.679

.4


Con

td...

Sub-

regi

ons/

GD

P p

er c

apit

aR

eal

GD

P g

row

thT

ax r

even

ueT

rade

Cou

ntri

es(c

onst

ant

2000

US

$)(a

nnua

l %

)(%

of

GD

P)

(% o

f G

DP

)

1990

1995

2000

2005

1990

1995

2000

2005

1990

1995

2000

2005

1990

1995

2000

2005

Pac

ific

Aus

tral

ia16

439.

718

268.

020

866.

923

039.

4–0

.64.

11.

92.

8..

..22

.123

.932

.638

.744

.8..

Coo

k Is

land

s..

....

....

....

....

....

....

....

..

Fij

i..

1938

.220

38.6

2198

.0..

2.5

–1.7

0.7

22.8

22.0

..23

.512

9.5

113.

012

4.6

..

Kir

ibat

i42

0.8

464.

954

0.5

523.

82.

15.

41.

9–0

.2..

....

..15

8.9

104.

674

.7..

Mar

shal

l Is

land

s27

24.1

2744

.221

02.1

2037

.07.

02.

70.

93.

5..

....

....

....

..

Mic

ron

esia

,19

27.9

2135

.320

14.2

1990

.23.

72.

68.

41.

5..

....

....

....

..Fe

d. S

ts.

Nau

ru..

....

....

....

....

....

....

....

..

New

Zea

lan

d11

552.

012

636.

513

654.

015

297.

7–0

.02

4.2

2.1

1.9

....

..31

.853

.457

.369

.3..

Niu

e..

....

....

....

....

....

....

....

..

Pala

u..

....

6367

.5..

10.9

0.3

5.5

....

....

..78

.011

5.7

158.

8

Papu

a N

ew52

0.1

689.

364

5.4

628.

0–3

.0–3

.3–1

.23.

320

.120

.819

.4..

89.6

105.

613

4.8

..G

uin

ea

Sam

oa11

23.8

1135

.913

05.2

1547

.4–4

.46.

67.

05.

4..

....

....

94.5

91.0

..

Solo

mon

Isl

ands

819.

792

8.5

714.

767

6.8

1.8

7.0

–14.

35.

0..

....

..11

9.6

135.

598

.6..

Tok

elau

....

....

....

....

....

....

....

....

Ton

ga11

90.1

1407

.714

70.5

1628

.7–2

.04.

55.

42.

3..

....

..99

.052

.145

.4..

Tuv

alu

....

....

....

....

....

....

....

....

Van

uatu

1099

.413

14.4

1277

.412

12.2

0.04

–0.0

32.

76.

822

.619

.6..

..12

6.2

100.

6..

..

Not

e: T

rade

as

a sh

are

of G

DP

= (

Exp

orts

+ I

mpo

rts)

/GD

P.

Sour

ce:

Wor

ld B

ank

(Wor

ld D

evel

opm

ent

Indi

cato

rs o

nlin

e) 2

007b

.


Con

td...

Tab

le 1

1: M

acro

In

dica

tors

: Str

uct

ure

of

the

Eco

nom

y

Sub-

regi

ons/

Cou

ntri

esA

gric

ultu

re,

valu

e ad

ded

Indu

stry

, val

ue a

dded

Serv

ices

, va

lue

adde

dO

DA

(% o

f G

DP

)a(%

of

GD

P)a

(% o

f G

DP

)a(%

of

GD

P)b

1990

1995

2000

2005

1990

1995

2000

2005

1990

1995

2000

2005

2004

Eas

t A

sia

Bru

nei

Dar

ussa

lam

2.4

2.5

2.7

..54

.843

.947

.8..

42.8

53.5

49.5

....

Cam

bodi

a..

49.6

37.9

34.2

..14

.823

.026

.7..

35.5

39.1

39.1

9.8

Chi

na

27.0

19.8

14.8

12.5

41.6

47.2

45.9

47.3

31.3

33.1

39.3

40.1

0.1

Hon

g K

ong,

0.2

0.1

0.1

0.1

24.4

15.2

13.3

9.2

75.4

84.7

86.6

90.7

..C

hina

(SA

R)

Indo

nesi

a19

.417

.115

.613

.139

.141

.845

.944

.941

.541

.138

.542

.0..

Japa

n2.

62.

01.

8..

39.5

34.4

32.4

..57

.963

.765

.8..

..

Kor

ea,

Rep

. of

8.9

6.3

4.9

3.4

41.6

41.9

40.7

40.3

49.5

51.8

54.4

56.3

..

Kor

ea,

DPR

....

....

....

....

....

....

..

Lao

PDR

61.2

55.7

52.6

44.8

14.5

19.2

22.9

29.5

24.3

25.1

24.5

25.7

11.0

Mac

ao,

Chi

na (

SAR

)..

0.0

0.0

0.0

..16

.315

.714

.7..

87.8

90.3

88.7

..

Mal

aysi

a15

.212

.98.

88.

742

.241

.450

.751

.842

.645

.640

.539

.60.

2

Mon

golia

....

33.8

23.7

....

24.0

38.8

....

42.1

37.5

16.2

Mya

nmar

57.3

60.1

57.2

..10

.59.

89.

7..

32.2

30.1

33.1

....

Phi

lippi

nes

21.9

21.6

15.8

14.3

34.5

32.1

32.3

32.2

43.6

46.3

52.0

53.4

0.5

Sin

gapo

re0.

40.

20.

10.

134

.735

.135

.633

.864

.964

.764

.366

.1..

Tha

iland

12.5

9.5

9.0

10.0

37.2

40.7

42.0

44.2

50.3

49.7

49.0

45.9

..

Tim

or-L

este

....

25.8

31.8

....

18.5

15.2

....

55.7

53.0

45.1

Vie

t N

am38

.727

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.520

.922

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0

Sou

th a

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t A

sia

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han

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n..

....

36.1

....

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.5..

....

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..

Ban

glad

esh

30.3

26.4

25.5

20.1

21.5

24.6

25.3

27.2

48.3

49.1

49.2

52.6

2.5

Bhu

tan

36.7

33.6

28.5

25.2

26.3

34.4

35.2

38.1

37.0

32.0

36.3

36.7

11.6

Indi

a31

.328

.223

.418

.327

.628

.126

.227

.341

.143

.650

.554

.40.

1

Iran

, Is

lam

ic R

ep.

of19

.118

.413

.710

.428

.734

.236

.744

.652

.247

.449

.545

.00.

1

Mal

dive

s..

....

....

....

....

....

..3.

7

Nep

al50

.640

.839

.638

.215

.922

.221

.521

.033

.537

.038

.940

.86.

4

Paki

stan

26.0

26.1

26.2

22.2

25.2

23.8

22.6

26.5

48.8

50.1

51.2

51.3

1.5

Sri

Lank

a26

.323

.019

.916

.826

.026

.527

.326

.147

.750

.552

.857

.12.

6


Con

td...

Sub-

regi

ons/

Cou

ntri

esA

gric

ultu

re,

valu

e ad

ded

Indu

stry

, val

ue a

dded

Serv

ices

, va

lue

adde

dO

DA

(% o

f G

DP

)a(%

of

GD

P)a

(% o

f G

DP

)a(%

of

GD

P)b

1990

1995

2000

2005

1990

1995

2000

2005

1990

1995

2000

2005

2004

Pac

ific

Aus

tral

ia3.

63.

84.

0..

30.0

28.3

26.1

..66

.467

.970

.0..

..

Coo

k Is

land

s..

....

....

....

....

....

....

Fij

i20

.419

.717

.015

.824

.025

.425

.825

.355

.654

.957

.258

.92.

4

Kir

ibat

i18

.620

.97.

0..

7.6

5.1

9.7

..73

.874

.183

.3..

..

Mar

shal

l Is

land

s..

16.0

....

..16

.1..

....

67.9

....

..

Mic

rone

sia,

Fed

. St

s...

....

....

....

....

....

....

Nau

ru..

....

....

....

....

....

....

New

Zea

lan

d7.

07.

58.

9..

27.9

26.9

25.3

..65

.165

.665

.8..

..

Niu

e..

....

....

....

....

....

....

Pala

u25

.95.

83.

93.

1..

9.3

15.1

19.0

58.6

83.5

80.0

76.9

..

Papu

a N

ew G

uine

a32

.4..

28.4

..34

.1..

44.0

..45

.5..

27.7

..6.

8

Sam

oa..

18.5

16.8

13.6

..29

.626

.027

.3..

51.9

57.2

59.1

8.2

Solo

mon

Isl

ands

....

....

....

....

....

....

47.3

Tok

elau

....

....

....

....

....

....

..

Ton

ga35

.630

.329

.7..

13.9

18.4

17.2

..50

.551

.353

.1..

9.1

Tuv

alu

....

....

....

....

....

....

..

Van

uatu

20.7

16.6

15.6

..12

.311

.59.

3..

67.0

71.9

75.1

..11

.9

Sour

ces:

(a)

Wor

ld B

ank

(Wor

ld D

evel

opm

ent

Indi

cato

rs o

nlin

e) 2

007b

; (b

) U

ND

P (U

nite

d N

atio

ns D

evel

opm

ent

Prog

ram

me)

200

6.


Contd...

Table 12: Macro Indicators: Sectoral Distribution ofWorkforce and Unemployment Rate

Sub-regions/ Employment in agriculture Employment in industry Employment in services Unemployment rateCountries (% of total employment) (% of total employment) (% of total employment) (% of total labour force)

1990 1995 2000 2004 1990 1995 2000 2004 1990 1995 2000 2004 1990 1995 2000 2004

East Asia

Brunei Darussalam .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

Cambodia .. .. 73.7 60.3 .. .. 8.4 12.5 .. .. 17.1 27.0 .. .. 2.5 0.8

China 53.4 48.5 46.3 .. 19.0 21.0 17.3 .. 9.9 12.2 12.7 .. 2.5 2.9 3.1 4.2

Hong Kong, 0.9 0.6 0.3 0.3 36.7 27.0 20.3 15.7 62.4 72.4 79.4 84.1 1.3 3.2 4.9 6.8China (SAR)

Indonesia 55.9 44.0 45.1 43.3 13.7 18.4 17.5 18.0 30.2 37.6 37.3 38.7 .. .. 6.1 9.9

Japan 7.2 5.7 5.1 4.5 34.1 33.6 31.2 28.4 58.2 60.4 63.1 66.0 2.1 3.2 4.8 4.7

Korea, Rep. of 17.9 12.4 10.6 8.1 35.4 33.3 28.1 27.5 46.7 54.2 61.2 64.3 2.5 2.1 4.1 3.5

Korea, DPR .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

Lao PDR .. 85.4 .. .. .. 3.5 .. .. .. 11.0 .. .. .. 2.6 .. ..

Macao, China 0.2 0.2 0.2 0.3 42.5 32.0 28.2 25.3 57.2 67.6 71.5 74.4 3.2 3.6 6.6 4.8(SAR)

Malaysia 26.0 20.0 18.4 14.8 27.5 32.3 32.2 30.1 46.5 47.7 49.5 52.5 4.7 3.1 3.0 3.5

Mongolia .. 46.1 48.6 40.2 .. 17.9 14.1 16.1 .. 35.9 37.2 43.7 .. .. 17.5 ..

Myanmar 69.7 .. .. .. 9.2 .. .. .. 21.1 .. .. .. 6.0 .. .. ..

Philippines 45.2 44.1 37.4 37.1 15.0 15.6 16.0 15.4 39.7 40.3 46.5 47.5 8.1 8.4 10.1 10.9

Singapore .. 0.2 0.2 0.3 .. 31.0 34.2 23.3 .. 67.9 65.4 76.3 1.7 2.7 4.4 ..

Thailand 63.3 51.6 48.5 42.3 13.6 18.9 17.9 20.5 22.4 28.8 32.9 37.1 2.2 .. 2.4 1.5

Timor-Leste .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

Viet Nam .. .. 65.3 57.9 .. .. 12.4 17.4 .. .. 22.3 24.7 .. .. .. 2.1

South and West Asia

Afghanistan .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

Bangladesh 66.4 .. 62.1 .. 13.0 .. 10.3 .. 16.2 .. 23.5 .. 1.9 .. 3.3 ..

Bhutan .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

India 69.1 66.7 .. .. 13.6 12.9 .. .. 17.3 20.3 .. .. .. .. 4.3 5.0

Iran, Islamic 26.4 22.1 .. .. 28.3 31.4 .. .. 45.3 46.5 .. .. .. .. 14.3 ..Rep. of

Maldives .. 22.2 13.7 .. .. 23.9 19.0 .. .. 50.4 50.2 .. .. 0.8 2.0 ..

Nepal 83.3 78.5 .. .. 2.3 5.5 .. .. 13.7 21.0 .. .. .. .. .. ..

Pakistan 51.1 46.8 48.4 .. 19.8 18.5 18.0 .. 28.9 34.6 33.5 .. 2.6 5.0 7.2 7.7

Sri Lanka 47.8 37.3 .. .. 20.6 23.4 .. .. 30.0 33.6 .. .. 14.4 12.4 7.4 8.5

Pacific

Australia 5.6 5.0 5.0 3.8 25.1 22.8 21.7 21.2 69.3 72.2 73.3 74.8 7.0 8.1 5.9 5.4

Cook Islands .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

Fiji .. .. .. .. .. .. .. .. .. .. .. .. 6.4 5.4 .. ..

Kiribati .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..


Contd...

Sub-regions/ Employment in agriculture Employment in industry Employment in services Unemployment rateCountries (% of total employment) (% of total employment) (% of total employment) (% of total labour force)

1990 1995 2000 2004 1990 1995 2000 2004 1990 1995 2000 2004 1990 1995 2000 2004

Marshall Islands .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

Micronesia, .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..Fed. Sts.

Nauru .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

New Zealand 10.6 9.7 8.7 7.5 24.6 25.1 23.2 22.7 64.5 65.1 67.7 69.6 7.8 6.3 6.0 3.9

Niue .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

Palau .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

Papua New .. .. 72.3 .. .. .. 3.6 .. .. .. 22.7 .. 7.7 .. 2.8 ..Guinea

Samoa .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

Solomon Islands .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

Tokelau .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

Tonga .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

Tuvalu .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

Vanuatu .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

Source: World Bank (World Development Indicators online) 2007b.


Table 13: Access to Improved Water Source and Sanitation Facilities

MDG

Sub-regions/ Population with sustainable access to Population with access toCountries an improved water source (%) improved sanitation (%)

1990 2004 1990 2004

Urban Rural Total Urban Rural Total Urban Rural Total Urban Rural Total

East Asia

Brunei Darussalam .. .. .. .. .. .. .. .. .. .. .. ..Cambodia .. .. .. 64 35 41 .. .. .. 53 8 17China 99 59 70 93 67 77 64 7 23 69 28 44Hong Kong, .. .. .. .. .. .. .. .. .. .. .. ..China (SAR)

Indonesia 92 63 72 87 69 77 65 37 46 73 40 55Japan 100 100 100 100 100 100 100 100 100 100 100 100Korea, Rep. of 97 97 71 92 .. .. .. .. .. ..Korea, DPR 100 100 100 100 100 100 .. .. .. 58 60 59Lao PDR .. .. .. 79 43 51 .. .. .. 67 20 30Macao, China (SAR) .. .. .. .. .. .. .. .. .. .. .. ..Malaysia 100 96 98 100 96 99 95 .. .. 95 93 94Mongolia 87 30 63 87 30 62 .. .. .. 75 37 59Myanmar 86 47 57 80 77 78 48 16 24 88 72 77Philippines 95 80 87 87 82 85 66 48 57 80 59 72Singapore 100 .. 100 100 .. 100 100 100 100 100Thailand 98 94 95 98 100 99 95 74 80 98 99 99Timor-Leste .. .. .. 77 56 58 .. .. .. 66 33 36Viet Nam 90 59 65 99 80 85 58 30 36 92 50 61

South and West Asia

Afghanistan 10 3 4 63 31 39 7 2 3 49 29 34Bangladesh 83 69 72 82 72 74 55 12 20 51 35 39Bhutan .. .. .. 86 60 62 .. .. .. 65 70 70India 89 64 70 95 83 86 45 3 14 59 22 33Iran, Islamic 99 84 92 99 84 94 86 78 83 .. .. ..Rep. of

Maldives 100 95 96 98 76 83 100 .. .. 100 42 59Nepal 95 67 70 96 89 90 48 7 11 62 30 35Pakistan 95 78 83 96 89 91 82 17 37 92 41 59Sri Lanka 91 62 68 98 74 79 89 64 69 98 89 91

Pacific

Australia 100 100 100 100 100 100 100 100 100 100 100 100Cook Islands 99 87 94 98 88 94 100 91 94 100 100 100Fiji .. .. .. 43 51 47 87 55 68 87 55 72Kiribati 76 33 49 77 53 65 33 21 25 59 22 40Marshall Islands 95 97 96 82 96 87 88 51 74 93 58 82Micronesia, 93 86 88 95 94 94 54 20 29 61 14 28Fed. Sts.

Nauru .. .. .. .. .. .. .. .. .. .. .. ..New Zealand 100 82 97 100 .. .. .. 88 .. .. .. ..Niue 100 100 100 100 100 100 100 100 100 100 100 100Palau 73 98 80 79 94 85 76 54 67 96 52 80Papua New Guinea 88 32 39 88 32 39 67 41 44 67 41 44Samoa 99 89 91 90 87 88 100 98 98 100 100 100Solomon Islands .. .. .. 94 65 70 98 .. .. 98 18 31Tokelau .. 94 94 .. 88 88 .. 39 39 78 .. 78Tonga 100 100 100 100 100 100 98 96 96 98 96 96Tuvalu 92 89 89 94 92 100 83 74 78 93 84 90Vanuatu 93 53 60 86 52 60 .. .. .. 78 42 50

Note: Total is not the average of urban and rural.Source: UN (United Nations) 2007.


Table 14: Maternal and Child Health

MDG

Sub-regions/Countries Maternal mortality rate Infant mortality rate Child mortality rate under(per 100,000 live births)a (per 1,000 live births)a age 5yrs (per 1,000)b

1990 1995 2000 1990 1995 2000 2005 1990 1995 2000 2005

East Asia

Brunei Darussalam 60 22 37 10 8 8 8 11 9 9 9Cambodia 900 590 450 80 88 95 98 115 120 135 143China 95 60 56 38 37 33 23 49 46 41 27Hong Kong, China (SAR) 7 .. .. .. .. .. .. .. .. .. ..Indonesia 650 470 230 60 48 36 28 91 66 48 36Japan 18 12 10 5 4 3 3 6 6 5 4Korea, Rep. of 130 20 20 8 6 5 5 9 6 5 5Korea, DPR 70 35 67 42 42 42 42 55 55 55 55Lao PDR 650 650 650 120 99 77 62 163 131 101 79Macao, China (SAR) .. 20 .. .. .. .. .. .. .. .. ..Malaysia 80 39 41 16 13 11 10 22 17 14 12Mongolia 65 65 110 78 64 50 39 108 87 65 49Myanmar 580 170 360 91 83 78 75 130 117 110 105Philippines 280 240 200 41 35 30 25 62 49 40 33Singapore 10 9 30 7 4 3 3 8 .. .. 3Thailand 200 44 44 31 23 19 18 37 26 22 21Timor-Leste .. 850 660 133 118 85 52 177 154 107 61Viet Nam 160 95 130 38 32 23 16 53 44 30 19

South and West Asia

Afghanistan 1700 820 1900 168 165 165 165 .. .. .. ..Bangladesh 850 600 380 100 83 66 54 149 120 92 73Bhutan 1600 500 420 107 93 77 65 166 133 100 75India 570 440 540 84 74 69 56 123 104 94 74Iran, Islamic Rep. of 120 130 76 54 43 36 31 72 55 44 36Maldives .. 390 110 79 63 45 33 111 86 60 42Nepal 1500 830 740 100 84 69 56 145 120 95 74Pakistan 340 200 500 100 93 85 79 130 118 108 99Sri Lanka 140 60 92 26 21 16 12 32 25 19 14

Pacific

Australia 9 6 8 8 6 6 5 10 .. .. 6Cook Islands .. .. .. 26 24 20 17 .. .. .. ..Fiji 90 20 75 19 17 16 16 22 19 18 18Kiribati .. .. .. 65 57 52 48 88 77 70 65Marshall Islands .. .. .. 63 59 55 51 92 81 68 58Micronesia, Fed. Sts. .. .. .. 45 41 37 34 58 52 47 42Nauru .. .. .. .. 25 25 25 .. .. .. ..New Zealand 25 15 7 8 7 6 5 11 8 8 6Niue .. .. .. .. .. .. .. .. .. .. ..Palau .. .. .. 18 15 13 10 21 17 14 11Papua New Guinea 930 390 300 69 64 60 55 94 87 80 74Samoa 35 15 130 40 33 28 24 50 41 34 29Solomon Islands .. 60 130 31 29 26 24 38 35 32 29Tokelau .. .. .. .. .. .. .. .. .. .. ..Tonga .. .. .. 26 24 22 20 32 29 26 24Tuvalu .. .. .. 42 38 35 31 .. .. .. ..Vanuatu 280 32 130 48 40 38 31 62 50 48 38

Sources: (a) UN (United Nations) 2007; (b) World Bank (World Development Indicators online) 2007b.


Con

td...

Tab

le 1

5: I

nci

den

ce o

f M

ajor

Dis

ease

s

MD

G

Sub-

regi

ons/

Tub

ercu

losi

s pr

eval

ence

Tub

ercu

losi

s de

ath

rate

Tub

ercu

losi

s,Im

mun

izat

ion

agai

nst

Imm

uniz

atio

n, D

PT

Cou

ntri

esra

te (

per

100,

000

per

100,

000a

DO

TS

trea

tmen

tm

easl

es (

% o

f(%

of

chil

dren

age

spe

ople

)asu

cces

s (%

)ach

ildr

en 1

yr o

ld)a

12–2

3 m

onth

s)b

1990

1995

2000

2005

1990

1995

2000

2005

1995

2000

2003

1990

1995

2000

2005

1990

1995

2000

2005

Eas

t A

sia

Bru

nei

Dar

ussa

lam

113

9356

6312

114

5..

6360

9999

9997

9399

9999

Cam

bodi

a95

185

380

670

311

210

910

287

9191

9334

6265

7938

3950

82

Chi

na

325

304

271

208

2422

2016

9695

9498

8085

8697

8085

87

Hon

g K

ong,

138

9887

7711

87

6..

....

....

....

....

....

Chi

na (

SAR

)

Indo

nesi

a44

038

032

726

291

7561

4191

8787

5863

7272

6069

7570

Japa

n70

6045

387

64

4..

....

7393

9699

9074

8599

Kor

ea,

Rep

. of

123

110

142

135

1010

1211

....

..93

9395

9974

9997

96

Kor

ea,

DPR

428

400

368

179

5957

3513

....

..98

6778

9698

6456

79

Lao

PDR

472

407

346

306

3733

2824

7082

7932

6842

4118

5453

49

Mac

ao,

Chi

na (

SAR

)12

395

8787

1210

79

....

....

....

....

....

..

Mal

aysi

a19

515

413

913

122

1917

1670

7872

7082

8890

9090

9590

Mon

golia

566

486

285

206

5145

3623

..87

8892

8594

9984

8895

99

Mya

nmar

417

385

287

170

5050

4015

....

..90

8284

7288

8482

73

Phi

lippi

nes

820

773

554

450

8074

5847

..88

8885

7281

8088

7080

79

Sin

gapo

re52

4939

286

54

3..

....

8497

9696

8598

9896

Tha

iland

355

327

252

204

2727

2219

..69

7380

9194

9692

9697

98

Tim

or-L

este

1200

1111

1111

713

126

121

121

88..

....

....

..48

....

....

Vie

t N

am47

034

625

123

541

3124

2391

9292

8895

9795

8893

9695

Sou

th a

nd

Wes

t A

sia

Afg

han

ista

n60

757

144

928

869

6552

35..

8686

2041

3564

2520

3176

Ban

glad

esh

630

575

494

406

7666

5747

7183

8565

7976

8169

6983

88

Bhu

tan

374

272

218

174

4030

2419

9790

9093

8576

9396

8792

95

Indi

a57

053

345

729

942

4342

2979

8486

5672

5658

7071

5759

Iran

, Is

lam

ic R

ep.

of50

5540

304

54

3..

....

8595

9994

9198

9995

Mal

dive

s15

189

9053

85

73

9797

9196

9699

9794

9497

98

Nep

al62

152

431

024

451

4528

23..

8687

5756

7174

4354

7275

Paki

stan

429

424

416

297

4949

4837

7075

7550

4756

7854

5861

72

Sri

Lank

a10

999

109

8010

1010

879

7781

8087

9999

8693

9999


Con

td...

MD

G

Sub-

regi

ons/

Tub

ercu

losi

s pr

eval

ence

Tub

ercu

losi

s de

ath

rate

Tub

ercu

losi

s, D

OT

SIm

mun

izat

ion

agai

nst

Imm

uniz

atio

n, D

PT

Cou

ntri

esra

te (

per

100,

000

per

100,

000a

trea

tmen

tm

easl

es (

% o

f(%

of

chil

dren

age

spe

ople

)asu

cces

s (%

)ach

ildr

en 1

yr o

ld)a

12–2

3 m

onth

s)b

1990

1995

2000

2005

1990

1995

2000

2005

1995

2000

2003

1990

1995

2000

2005

1990

1995

2000

2005

Pac

ific

Aus

tral

ia7

76

61

11

1..

7482

8687

9194

9586

9092

Coo

k Is

land

s49

3926

265

43

3..

....

6796

7699

....

....

Fij

i62

4238

307

55

486

8686

8494

8570

9797

8975

Kir

ibat

i11

5792

855

942

611

596

6449

....

..75

4780

5697

6090

62

Mar

shal

l Is

land

s68

254

743

026

968

5647

32..

....

5257

9486

9270

3977

Mic

rone

sia,

Fed

. St

s.31

121

617

112

333

2419

14..

....

8190

8296

8583

8594

Nau

ru32

826

320

615

633

2721

18..

....

....

880

....

....

New

Zea

lan

d10

1111

91

11

1..

....

9084

8582

9089

9089

Niu

e13

310

696

8713

1110

9..

....

9934

9999

Pala

u88

6411

561

65

87

....

..98

9983

9899

9996

98

Papu

a N

ew G

uine

a78

972

263

747

568

6459

46..

6358

6742

6260

6862

5961

Sam

oa44

3127

275

43

3..

....

8996

9357

9094

9964

Solo

mon

Isl

ands

658

459

289

201

6547

3223

....

..70

6887

7277

6982

80

Tok

elau

126

112

112

112

98

1212

....

....

....

....

....

..

Ton

ga53

4034

326

53

3..

....

8694

9599

9495

9599

Tuv

alu

1146

857

723

495

105

8173

55..

....

9594

8162

....

....

Van

uatu

212

162

8784

2117

710

....

..66

6094

7076

7390

66

Sour

ces:

(a)

UN

(U

nite

d N

atio

ns)

2007

; (b

) W

orld

Ban

k (W

orld

Dev

elop

men

t In

dica

tors

onl

ine)

200

7b.


Table 16: School Enrolment

MDG MDG

Sub-regions/ School enrolment School enrolment Higher education Education: Youth literacyCountries (primary), net (%)a (secondary), enrolment, Children reaching rate (% of

net (%)b gross (%)b grade 5 (% of pupils people agesstarting grade 1)a 15–24)c

1990 2000 2004 2000 2005 1991 2000 2004 1990 2000 2003 1990 2004

East Asia

Brunei Darussalam 89.7 .. .. .. 87.3 .. 12.6 14.7 .. .. 98.0 .. ..Cambodia 66.6 91.1 97.6 15.4 24.5 0.7 2.2 2.9 .. 62.8 59.7 73.5 83.4China 97.4 .. .. .. .. 3.0 7.6 19.1 86.0 .. .. 95.3 98.9Hong Kong, .. .. 97.1 .. 79.6 .. .. 30.4 100.0 99.6 .. ..China (SAR)

Indonesia 96.7 97.9 99.0 48.6 58.3 9.2 .. 16.7 83.6 95.3 92.1 95.0 98.7Japan 99.7 100.0 99.9 99.5 100.0 29.6 47.4 54.0 100.0 .. .. .. ..Korea, Rep. of 99.7 96.8 99.8 94.5 90.4 38.6 72.6 88.5 99.5 99.5 99.8 .. ..Korea, DPR .. .. .. .. .. .. .. .. .. .. .. .. ..Lao PDR 62.6 81.7 84.4 28.6 37.7 .. 2.8 5.9 .. 53.2 62.6 70.1 78.5Macao, China (SAR) 81.1 85.7 89.3 65.5 78.2 25.4 26.4 68.8 .. .. .. .. ..Malaysia 93.7 96.9 95.4 69.1 .. 8.2 26.3 32.0 98.2 87.1 .. 94.8 97.2Mongolia 90.1 93.8 89.4 59.6 84.2 14.0 28.8 38.9 .. .. .. 98.9 97.7Myanmar 97.8 81.8 87.0 33.6 37.2 4.3 11.3 .. .. 55.2 69.0 .. ..Philippines 96.5 .. 94.4 .. 60.5 27.1 .. 28.8 .. 79.3 75.3 97.3 95.1Singapore 96.4 .. .. .. .. 20.5 .. .. .. .. .. 99.0 ..Thailand 75.9 .. .. .. .. .. 34.2 41.0 .. .. .. 98.1 98.0Timor-Leste .. .. .. .. .. .. .. .. .. .. .. .. ..Viet Nam 90.5 95.4 .. 61.0 69.3 1.9 9.5 16.0 .. 85.7 .. 94.1 93.9

South and West Asia

Afghanistan 26.5 .. .. .. .. .. .. 1.1 .. .. .. .. ..Bangladesh 71.2 93.1 97.6 46.9 .. .. 5.8 6.0 .. 65.5 65.1 42.0 ..Bhutan .. .. .. .. .. .. .. .. .. 91.0 .. .. ..India .. 87.4 96.1 .. .. 6.0 10.2 11.8 .. 59.0 78.9 64.3 76.4Iran, Islamic Rep. of 92.3 79.8 88.7 .. 77.0 10.2 19.0 22.5 89.9 97.5 .. .. ..Maldives 86.7 96.5 84.8 40.0 62.6 .. .. 0.2 .. .. .. 98.1 98.2Nepal .. 72.7 80.1 .. .. 5.6 4.1 5.6 51.3 45.8 67.1 46.6 70.1Pakistan .. .. 65.7 .. 21.0 3.4 .. 3.2 .. .. 69.7 47.4 65.5Sri Lanka 89.9 .. 97.1 .. .. 4.3 .. .. 94.4 .. .. 95.1 95.6

Pacific

Australia 99.2 92.7 95.9 88.6 86.4 39.2 65.4 72.2 .. .. .. .. ..Cook Islands .. 78.8 .. .. .. .. .. .. .. .. .. .. ..Fiji 99.6 100.0 98.7 76.6 82.7 11.9 .. 15.3 87.0 89.8 98.7 97.8 ..Kiribati .. .. .. .. 67.6 .. .. .. 93.4 .. 81.4 .. ..Marshall Islands .. .. .. .. .. .. .. .. .. .. .. .. ..Micronesia, Fed. Sts. .. .. .. .. .. .. 14.1 .. .. .. .. .. ..Nauru .. .. .. .. .. .. .. .. .. .. .. .. ..New Zealand 99.6 99.1 99.4 .. .. 45.2 68.8 85.8 92.2 .. .. .. ..Niue .. .. .. .. .. .. .. .. .. .. .. .. ..Palau .. 96.4 .. .. .. .. 40.6 .. .. .. .. .. ..Papua New Guinea 66.0 .. .. .. .. .. .. .. 59.1 50.6 .. 68.6 66.7Samoa .. 92.2 99.1 64.0 .. .. 7.4 .. .. 95.9 .. .. 99.3Solomon Islands 83.2 .. .. 17.7 .. .. .. .. 84.9 .. .. .. ..Tokelau .. .. .. .. .. .. .. .. .. .. .. .. ..Tonga 91.8 .. .. 72.2 .. .. 4.7 6.1 89.6 94.6 .. .. ..Tuvalu .. .. .. .. .. .. .. .. .. 72.7 .. .. ..Vanuatu 70.6 93.7 95.1 32.5 .. .. 4.0 5.0 .. .. .. .. ..

Sources: (a) UN (United Nations) 2007; (b) World Bank (World Development Indicators online) 2007b; (c) UNDP (UnitedNations Development Programme) 2006.


Con

td...

Tab

le 1

7: G

ende

r an

d D

evel

opm

ent

MD

G

Sub-

regi

ons/

Gir

ls t

o bo

ysG

irls

to

boys

Gir

ls t

o bo

ysW

omen

to

men

par

ity

Wag

e em

ploy

men

t of

Pro

port

ion

ofC

ount

ries

rati

o (p

rim

ary

rati

o (s

econ

-ra

tio

(ter

tiar

yin

dex,

as

rati

o of

wom

en i

n no

n-ag

ricu

l-se

ats

held

by

scho

olda

ry s

choo

len

rolm

ent)

ali

tera

cy r

ates

, ag

edtu

ral

sect

or a

s pe

rcen

t-w

omen

in

enro

lmen

t)a

enro

lmen

t)a

15-2

4 a

age

of t

otal

non

-agr

i-na

tion

al p

arli

a-cu

ltur

e em

ploy

eesb

men

t (%

)b

1990

2000

2001

1990

2000

2001

1990

2000

2001

1990

1995

2000

2004

1990

1995

2000

2004

1990

2000

2006

Eas

t A

sia

Bru

nei

Dar

ussa

lam

0.94

0.99

0.99

1.07

1.06

1.06

..1.

871.

74..

....

..11

.317

.230

.331

.5..

....

Cam

bodi

a0.

810.

880.

890.

430.

560.

60..

0.37

0.40

0.81

0.84

0.89

0.90

53.5

52.8

51.9

51.3

..8.

09.

8C

hin

a0.

931.

011.

000.

750.

920.

52..

..0.

950.

970.

990.

9937

.738

.739

.740

.921

.022

.020

.3H

ong

Kon

g,1.

010.

960.

951.

05..

0.97

....

....

....

..41

.242

.544

.847

.3..

....

Chi

na (

SAR

)In

done

sia

0.98

0.98

0.98

0.83

0.98

0.99

..0.

760.

860.

970.

980.

991.

0029

.229

.031

.731

.112

.0..

11.3

Japa

n1.

001.

001.

001.

021.

011.

010.

650.

850.

85..

....

..38

.038

.940

.041

.21.

05.

09.

4K

orea

, R

ep.

of1.

011.

011.

000.

971.

001.

000.

490.

570.

59..

....

..38

.138

.040

.141

.62.

04.

013

.4K

orea

, D

PR..

....

....

....

....

....

....

40.7

....

..21

.020

.020

.1La

o PD

R0.

790.

860.

860.

620.

720.

73..

0.59

0.60

0.76

0.80

0.83

0.90

42.1

....

..6.

021

.025

.2M

acao

, C

hina

(SA

R)

0.96

0.95

0.95

1.11

1.04

1.04

0.45

0.96

0.72

....

....

42.7

45.3

49.0

49.5

....

..M

alay

sia

1.00

1.00

1.00

1.07

1.11

1.10

0.89

1.09

..0.

991.

001.

001.

0037

.835

.936

.736

.95.

0..

9.1

Mon

golia

1.02

1.04

1.03

1.14

1.22

1.20

1.88

1.74

1.74

1.00

....

1.01

44.3

47.0

48.5

50.3

25.0

8.0

6.6

Mya

nmar

0.95

0.99

1.00

0.98

1.07

0.96

....

1.76

....

0.98

..36

.4..

....

....

..P

hilip

pin

es0.

991.

000.

991.

041.

101.

101.

42..

1.29

1.00

1.00

1.00

1.01

39.7

40.0

41.1

40.4

9.0

12.0

15.7

Sin

gapo

re0.

971.

001.

000.

931.

021.

020.

68..

..1.

00..

1.00

..42

.541

.045

.447

.05.

04.

021

.2T

haila

nd0.

960.

960.

960.

940.

95..

1.12

1.09

0.99

0.99

1.00

1.00

45.3

44.0

46.1

46.4

3.0

6.0

..T

imor

-Les

te..

....

....

....

....

....

....

19.0

....

....

..25

.3V

iet

Nam

0.93

0.94

0.93

0.91

0.91

0.92

..0.

740.

760.

991.

00..

0.99

52.1

51.2

49.7

49.1

18.0

26.0

27.3

Sou

th a

nd

Wes

t A

sia

Afg

han

ista

n0.

550.

000.

000.

52..

0.00

0.48

....

....

0.36

..17

.8..

....

4.0

..27

.3B

angl

ades

h0.

861.

011.

020.

521.

051.

100.

200.

540.

500.

650.

680.

70..

17.6

20.6

22.9

23.1

10.0

9.0

15.1

Bhu

tan

0.76

....

....

....

....

....

....

12.0

....

..2.

02.

02.

7In

dia

0.76

0.83

0.85

0.60

0.71

0.74

0.54

0.68

0.70

0.74

0.78

0.81

0.80

12.7

14.4

16.6

17.3

5.0

9.0

8.3

Iran

, Is

lam

ic R

ep.

of0.

900.

950.

960.

750.

940.

940.

480.

870.

94..

....

..11

.912

.513

.613

.72.

05.

04.

1M

aldi

ves

0.97

1.00

0.99

1.02

1.07

1.07

....

..1.

001.

001.

001.

0031

.831

.636

.735

.66.

0..

12.0

Nep

al0.

610.

850.

870.

440.

730.

750.

320.

280.

280.

410.

480.

560.

59..

....

..6.

06.

05.

9Pa

kist

an..

0.74

..0.

480.

66..

0.58

....

0.49

0.54

..0.

726.

67.

57.

48.

610

.0..

21.3

Sri

Lank

a0.

96..

..1.

09..

..0.

68..

..0.

980.

991.

001.

0139

.144

.046

.043

.25.

05.

04.

9


Con

td...

MD

G

Sub-

regi

ons/

Gir

ls t

o bo

ysG

irls

to

boys

Gir

ls t

o bo

ysW

omen

to

men

par

ity

Wag

e em

ploy

men

t of

Pro

port

ion

ofC

ount

ries

rati

o (p

rim

ary

rati

o (s

econ

-ra

tio

(ter

tiar

yin

dex,

as

rati

o of

wom

en i

n no

n-ag

ricu

l-se

ats

held

by

scho

olda

ry s

choo

len

rolm

ent)

ali

tera

cy r

ates

, ag

edtu

ral

sect

or a

s pe

rcen

t-w

omen

in

enro

lmen

t)a

enro

lmen

t)a

15-2

4 a

age

of t

otal

non

-agr

i-na

tion

al p

arli

a-cu

ltur

e em

ploy

eesb

men

t (%

)b

1990

2000

2001

1990

2000

2001

1990

2000

2001

1990

1995

2000

2004

1990

1995

2000

2004

1990

2000

2006

Pac

ific

Aus

tral

ia0.

991.

001.

001.

041.

000.

981.

161.

231.

23..

....

..44

.646

.848

.148

.66.

022

.024

.7

Coo

k Is

land

s..

0.98

0.95

..1.

101.

09..

....

....

....

....

....

....

..

Fij

i1.

000.

981.

00..

1.09

1.07

..1.

00..

1.00

1.00

....

29.9

31.3

33.9

35.9

..11

.011

.3

Kir

ibat

i..

0.99

1.01

..1.

611.

39..

....

....

....

....

....

0.0

5.0

7.1

Mar

shal

l Is

land

s..

0.96

0.95

....

....

..1.

29..

....

....

....

....

..3.

0

Mic

rone

sia,

Fed

. St

s...

....

....

....

....

....

....

....

....

..0.

00.

0

Nau

ru..

1.16

1.07

..1.

211.

01..

....

....

....

....

....

....

..

New

Zea

lan

d0.

981.

011.

001.

021.

071.

101.

451.

45..

....

..47

.948

.850

.550

.514

.029

.032

.2

Niu

e..

0.97

0.94

..1.

030.

98..

....

....

....

....

....

....

..

Pala

u..

0.97

....

1.03

1.00

..2.

352.

16..

....

....

....

....

0.0

0.0

Papu

a N

ew G

uine

a0.

860.

900.

900.

590.

790.

77..

....

0.84

0.87

0.89

0.93

20.3

25.0

32.1

35.4

0.0

2.0

0.9

Sam

oa1.

091.

001.

001.

221.

141.

141.

000.

930.

93..

....

1.00

....

....

0.0

8.0

8.2

Solo

mon

Isl

ands

0.86

0.92

0.94

0.63

0.78

0.81

....

....

....

....

....

..0.

02.

00.

0

Tok

elau

..1.

191.

10..

0.94

1.22

....

....

....

....

....

....

....

Ton

ga0.

960.

970.

981.

011.

101.

10..

1.60

1.62

....

....

....

....

0.0

..3.

3

Tuv

alu

..1.

041.

13..

..0.

93..

....

....

....

....

....

....

..

Van

uatu

0.98

0.98

0.98

0.79

1.15

0.92

....

....

....

....

....

..4.

00.

03.

8

Sour

ces:

(a)

UN

(U

nite

d N

atio

ns)

2007

; (b

) W

orld

Ban

k (W

orld

Dev

elop

men

t In

dica

tors

onl

ine)

200

7b.


Con

td...

Tab

le 1

8: E

nvi

ron

men

tal S

ust

ain

abil

ity:

For

est

Are

a an

d C

arbo

n D

iox

ide

Em

issi

on

MD

G

Sub-

regi

ons/

For

est

area

Car

bon

diox

ide

emis

sion

sO

zone

-dep

leti

ng C

FC

sG

DP

per

uni

t of

ene

rgy

use

Cou

ntri

es(%

of

land

are

a)a

(CO

2), m

etri

c to

ns p

er c

apit

aaco

nsum

ptio

n in

OD

P t

onsa

(con

stan

t 20

00 P

PP

$ p

er k

gof

oil

equ

ival

ent)

b

1990

2000

2005

1990

1995

2000

2004

1990

1995

2000

2005

1990

1995

2000

2003

Eas

t A

sia

Bru

nei

Dar

ussa

lam

59.4

54.6

52.8

22.7

17.7

25.6

24.1

..65

.047

.039

.0..

....

..C

ambo

dia

73.3

65.4

59.2

0.05

0.05

0.04

0.04

..94

.094

.045

.0..

....

..C

hin

a16

.819

.021

.22.

12.

62.

63.

841

829.

075

291.

039

124.

013

124.

02.

13.

14.

44.

4H

ong

Kon

g,..

....

4.6

4.8

5.8

5.4

....

....

10.5

10.7

11.3

11.2

Chi

na (

SAR

)In

done

sia

64.3

54.0

48.8

1.2

1.5

1.7

1.7

..83

51.0

5411

.023

85.0

4.1

4.6

4.3

4.1

Japa

n68

.468

.268

.28.

79.

19.

59.

897

723.

023

064.

0-2

4.0

0.0

6.5

6.2

6.2

6.4

Kor

ea,

Rep

. of

64.5

63.8

63.5

5.6

8.3

9.2

9.8

..10

039.

073

95.0

2730

.04.

54.

24.

04.

2K

orea

, D

PR68

.156

.651

.412

.211

.93.

43.

4..

825.

077

.092

.0..

....

..La

o PD

R75

.071

.669

.90.

10.

10.

20.

2..

43.0

45.0

19.0

....

....

Mac

ao,

Chi

na (

SAR

)..

....

2.8

3.0

3.7

4.7

....

....

....

....

Mal

aysi

a68

.165

.763

.63.

15.

85.

47.

033

84.0

3427

.019

80.0

668.

04.

44.

14.

24.

1M

ongo

lia7.

36.

86.

54.

53.

33.

03.

3..

7.0

11.0

4.0

....

....

Mya

nmar

59.6

52.5

49.0

0.1

0.2

0.2

0.2

..49

.026

.015

.0..

....

..P

hilip

pin

es35

.526

.724

.00.

70.

91.

01.

029

81.0

3382

.029

05.0

1014

.09.

17.

57.

27.

9Si

nga

pore

3.4

3.4

3.4

15.0

13.5

14.1

12.2

3167

.077

4.0

22.0

-1.0

3.4

3.2

4.3

4.6

Tha

iland

31.2

29.0

28.4

1.8

3.2

3.3

4.3

6660

.082

48.0

3568

.012

60.0

5.7

5.8

5.2

4.9

Tim

or-L

este

65.0

57.4

53.7

....

..0.

2..

....

....

....

..V

iet

Nam

28.8

37.7

41.7

0.3

0.4

0.7

1.2

..48

0.0

220.

023

5.0

3.3

3.7

4.2

4.2

Sou

th a

nd

Wes

t A

sia

Afg

han

ista

n2.

01.

61.

30.

20.

10.

040.

03..

380.

0..

141.

0..

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Contd...

Table 19: Poverty, Inequality and Undernourishment

MDG MDG MDG

Sub-regions/ Inequality:a Inequality: Inequality: Gini Poverty Poverty Poverty Prevalence ofCountries Ratioi of Ratioi of Gini (Land)c headcount headcount gap at undernourish-

expenditure expenditure indexa ratio at ratio at $1 a day ment (% ofshares of shares of $1 per day $2 per day (PPP) population)b

richest 20% richest 10% (PPP) (% (PPP) (% (%)b

to poorest 10% to of popula- of popula-20% poorest 10%a tion)a tion)a

1990-20041 1990-20041 1990-20041 1960-19941 1990-20041 1990-20041 1990-20041 2004

East Asia

Brunei Darussalam .. .. .. .. .. .. .. 4.0

Cambodia 6.9 11.6 40.4 .. 34.1 77.7 .. 33.0

China 10.7 18.4 44.7 43.8 16.6 46.7 2.1 12.0

Hong Kong, China (SAR) 9.7 17.8 43.4 .. .. .. .. ..

Indonesia 5.2 7.8 34.3 45.4 7.5 52.4 1.0 6.0

Japan 3.4 4.5 24.9 51.1 .. .. .. 2.5

Korea, Rep. of 4.7 7.8 31.6 37.2 2.0 <2 0.5 2.5

Korea, DPR .. .. .. .. .. .. .. 33.0

Lao PDR 5.4 8.3 34.6 .. 27.0 74.1 .. 19.0

Macao, China (SAR) .. .. .. .. .. .. .. ..

Malaysia 12.4* 22.1* 49.2* 38.2 2.0 9.3 0.5 3.0

Mongolia 9.1 17.8 30.3 68.0 27.0 74.9 3.1 27.0

Myanmar .. .. .. .. .. .. .. 5.0

Philippines 9.7 16.5 46.1 54.7 15.5 47.5 2.9 18.0

Singapore 9.7 17.7 42.5 29.1 .. .. .. ..

Thailand 7.7 12.6 42.0 44.7 2.0 25.2 0.5 22.0

Timor-Leste .. .. .. .. .. .. .. 9.0

Viet Nam 6.0 9.4 37.0 47.4 .. .. .. 16.0

South and West Asia

Afghanistan .. .. .. .. .. .. .. ..

Bangladesh 4.6 6.8 31.8 41.7 36.0 82.8 10.3 30.0

Bhutan .. .. .. .. .. .. .. ..

India 4.9 7.3 32.5 57.9 34.7 79.9 7.9 20.0

Iran, Islamic Rep. of 9.7 17.2 43.0 67.7 2.0 7.3 0.5 4.0

Maldives .. .. .. .. .. .. .. 10.0

Nepal 9.1 15.8 47.2 54.2 24.1 68.5 5.4 17.0

Pakistan 4.3 6.5 30.6 55.0 17.0 73.6 2.4 24.0

Sri Lanka 5.1 8.1 33.2 62.3 5.6 41.6 1.0 22.0

Pacific

Australia 7.0 12.5 35.2 80.5 .. .. .. 2.5

Cook Islands .. .. .. .. .. .. ..

Fiji .. .. .. .. .. .. .. 5.0

Kiribati .. .. .. .. .. .. .. 7.0

Marshall Islands .. .. .. .. .. .. .. ..


Contd...

MDG MDG MDG

Sub-regions/ Inequality:a Inequality: Inequality: Gini Poverty Poverty Poverty Prevalence ofCountries Ratioi of Ratioi of Gini (Land)c headcount headcount gap at undernourish-

expenditure expenditure indexa ratio at ratio at $1 a day ment (% ofshares of shares of $1 per day $2 per day (PPP) population)b

richest 20% richest 10% (PPP) (% (PPP) (% (%)b

to poorest 10% to of popula- of popula-20% poorest 10%a tion)a tion)a

1990-20041 1990-20041 1990-20041 1960-19941 1990-20041 1990-20041 1990-20041 2004

Pacific

Micronesia, Fed. Sts. .. .. .. .. .. .. .. ..

Nauru .. .. .. .. .. .. .. ..

New Zealand 6.8 12.5 36.2 71.2 .. .. .. 2.5

Niue .. .. .. .. .. .. .. ..

Palau .. .. .. .. .. .. .. ..

Papua New Guinea 12.6 23.8 50.9 .. .. .. .. ..

Samoa .. .. .. .. .. .. .. 4.0

Solomon Islands .. .. .. .. .. .. .. 21.0

Tokelau .. .. .. .. .. .. .. ..

Tonga .. .. .. .. .. .. .. ..

Tuvalu .. .. .. .. .. .. .. ..Vanuatu .. .. .. .. .. .. .. 11.0

Notes: 1 Data refer to the most recent year available during the period specified. * Malaysia data refers to income shares bypercentile of population. Data for all other countries refer to expenditure shares. Gini index varies between 0 and 100. A valueof 100 implies perfect inequality and 0 implies perfect equality. Prevalence of undernourishment indicates population belowminimum level of dietary energy consumption.

Sources: (a) UNDP (United Nations Development Programme) 2006; (b) World Bank (World Development Indicators online)2007b; (c) Frankema 2006.


Table 20: Access to Information

MDG

Sub-regions/ Telephone lines and cellular Internet users Households with televisionCountries subscribers (per 100 people)a (per 100 people)a (%)b

1990 1995 2000 2004 1995 2000 2005 1990 1995 2000 2001

East Asia

Brunei Darussalam 14.3 36.6 52.9 .. 1.10 9.00 36.10 .. 98.0 97.9 98.3Cambodia .. 0.2 1.2 6.2 .. 0.05 0.31 4.7 .. 32.5 ..China 0.6 3.6 18.1 49.4 0.00 1.77 8.44 53.8 77.2 86.1 87.3Hong Kong, 47.5 66.2 140.6 173.2 3.30 27.80 50.10 .. 97.9 98.0 99.0China (SAR)

Indonesia 0.6 1.8 5.0 18.1 0.03 0.92 7.18 25.2 43.8 53.8 54.5Japan 44.8 58.9 101.4 118.2 1.60 29.90 66.60 81.7 80.2 99.2 99.0Korea, Rep. of 30.8 45.4 114.6 131.4 0.80 41.40 68.30 92.5 98.0 .. ..Korea, DPR 2.5 2.3 2.2 .. .. .. .. .. .. .. ..Lao PDR 0.2 0.4 1.0 4.8 .. 0.11 0.42 .. 5.6 30.0 29.9Macao, China (SAR) 26.1 45.6 73.6 130.3 0.30 13.90 37.00 .. 80.4 79.2 92.5Malaysia 9.4 21.6 41.9 74.5 0.15 21.39 42.37 64.0 73.3 82.5 85.9Mongolia 3.2 3.5 11.5 21.9 0.01 1.26 10.14 .. 28.7 28.4 28.4Myanmar 0.2 0.4 0.6 1.0 .. .. 0.10 1.4 2.4 3.0 3.0Philippines 1.0 2.8 12.4 44.0 0.03 2.01 5.48 .. 46.5 52.8 61.5Singapore 36.3 49.2 116.8 132.7 2.80 32.40 39.80 84.3 98.3 98.6 99.4Thailand 2.5 8.2 14.1 53.7 0.09 3.74 11.34 72.3 84.4 90.6 90.6Timor-Leste .. .. .. .. .. .. .. .. .. .. ..Viet Nam 0.2 1.1 4.2 18.2 .. 0.25 12.72 .. 67.3 77.6 79.6

South and West Asia

Afghanistan 0.2 0.1 0.1 2.6 .. .. 1.00 .. .. 6.2 6.3Bangladesh 0.2 0.3 0.6 2.6 .. 0.08 0.26 3.8 9.3 17.5 17.2Bhutan 0.4 0.9 2.2 6.3 .. 0.34 3.09 .. .. .. ..India 0.6 1.3 3.5 9.1 0.03 0.54 5.44 7.4 23.0 30.0 31.6Iran, Islamic Rep. of 4.0 8.6 16.4 .. 0.00 1.00 10.90 .. 65.3 67.8 67.4Maldives 2.9 5.7 11.9 44.1 .. 2.22 19.7 34.5 56.7 61.5Nepal 0.3 0.4 1.2 2.2 0.00 0.22 0.83 .. 1.6 3.5 13.2Pakistan 0.8 1.7 2.4 6.2 0.00 0.22 6.82 13.7 27.0 37.4 38.5Sri Lanka 0.7 1.5 6.5 16.5 0.01 0.66 1.69 .. 23.8 22.4 20.6

Pacific

Australia 46.7 61.7 98.7 141.3 2.80 34.50 70.40 98.3 97.2 96.6 96.3Cook Islands .. .. .. .. .. .. .. .. .. .. ..Fiji 5.8 8.7 17.5 29.2 0.01 1.48 8.25 .. 39.1 53.7 55.1Kiribati 1.7 2.6 4.3 .. .. 1.80 2.20 .. 11.9 22.4 23.3Marshall Islands 1.1 7.2 8.6 .. .. 1.60 .. .. .. ..Micronesia, Fed. Sts. 2.5 7.4 9.0 22.3 .. 3.70 12.60 .. .. 14.0 13.9Nauru .. 18.6 26.1 .. .. .. .. .. .. .. ..New Zealand 45.0 56.7 87.4 123.6 4.90 39.30 68.30 72.5 86.7 98.0 98.1Niue .. .. .. .. .. .. .. .. .. .. ..Palau .. .. .. .. .. .. .. .. .. .. ..Papua New Guinea 0.8 1.0 1.4 1.9 .. 0.88 1.78 .. 13.6 7.8 8.1Samoa 2.6 4.6 6.2 .. .. 0.60 3.40 .. 96.4 93.3 96.6Solomon Islands 1.5 1.8 2.1 .. 0.00 0.50 0.80 .. 1.8 4.1 4.3Tokelau .. .. .. .. .. .. .. .. .. .. ..Tonga 4.6 7.1 10.0 .. 0.10 2.40 3.00 .. .. .. ..Tuvalu 1.3 5.5 7.0 .. .. 1.00 .. .. .. .. ..Vanuatu 1.8 2.6 3.7 8.1 .. 2.10 3.50 .. 5.0 5.6 5.6

Sources: (a) UN (United Nations) 2007; (b) World Bank (World Development Indicators online) 2007b.


TTTTTechnical Note 1echnical Note 1echnical Note 1echnical Note 1echnical Note 1

Indicator/index

Control ofCorruptionIndex (CCI)

CorruptionPerceptionsIndex (CPI)

ICRGCorruptionRisk Scores

Source

World Bank (http://info.worldbank.org/governance/wgi2007/resources.htm)

TransparencyInternational (http://www.transparency.org/policy_research/surveys_indices/cpi)

The PRS (PoliticalRisk Service) group(https://www.prsgroup.com)

Survey respondents

Business leaders,opinion of generalpublic andassessments bycountry analysts

Business leadersand assessments bycountry analysts

Assessments of staff

Availablefor years

1996, 1998,2000, 2002to 2006

1995 to2007

1984 to2006

Countries

212 countriesand territoriesin 2006

180 countriesin 2007

140 countriesin 2006

Scope

The extent to whichpublic power isexercised for privategain, including bothpetty and grand formsof corruption, as wellas ‘capture’ of the stateby elites and privateinterests

CPI ask questions thatrelate to the misuse ofpublic power forprivate benefit, forexample bribery ofpublic officials,kickbacks in publicprocurement,embezzlement of publicfunds) or questionsthat probe the strengthof anti-corruptionpolicies, therebyencompassing bothadministrative andpolitical corruption.

Potential corruptionrisks to internationalbusiness operationswhich includes actualand potentialcorruption in the formof excessive patronage,nepotism, jobreservations, ‘favour-for-favours’, secretparty funding, andsuspiciously close tiesbetween politics andbusiness.

Measuring CorruptionMeasuring CorruptionMeasuring CorruptionMeasuring CorruptionMeasuring Corruption

Just as it is difficult to define corruption across different cultures and political environments, it is also verydifficult to measure it. Some of the existing efforts to assess corruption are summarized below:

Corruption: Some Popular Measures


CorruptionIndex

CorporateCorruption/EthicsIndices

GlobalIntegrityIndex

GlobalCorruptionBarometer(GCB)

Bribe PayersIndex (BPI)

CountryPolicyInstitutionalAssessment(CPIA)

CountryPerformanceAssessment(CPAs)

Indicator/index

Source ScopeCountriesAvailablefor years

Survey respondents

Source: Based on Hawken and Munck 2007.

World EconomicForum(www.weforum.org)

Daniel Kaufmann(http://www.worldbank.org/wbi/governance/pubs/gcr2004.html)

Global Integrity(http://www.globalintegrity.org/data/downloads.cfm)

Transparency Interna-tional (http://www.transparency.org/policy_research/surveys_indices/gcb)

TransparencyInternational (http://www.transparency.org/policy_research/surveys_indices/bpi)

The World Bank(http://go.worldbank.org/74EDY81YU0)

Asian DevelopmentBank (http://www.adb.org/Documents/Reports/Country-Performance-Assessment-Exercise/IN76-07.pdf)

Executive opinionsurvey (expertopinions of over11,000 businessleaders andentrepreneurs)

Based on theanalysis of the 2004survey of enter-prises by the WorldEconomic Forum

Based on indepen-dent social scientistsand investigativejournalists inrespective countries

Based on GallupInternational’s Voiceof the People Surveywhich coversopinion of 59,661people

The 2006 BPI basedon the responses of11,232 business exe-cutives from compa-nies in 125 countriesto two questionsabout the businesspractices of foreignfirms operating intheir country, aspart of the WorldEconomic Forum’sExecutive OpinionSurvey 2006

Expert rating

Expert rating, usingsame framework ofthe World Bank’sCountry Policy andInstitutionalAssessment (CPIA)

Yearly(1996–2007-08)

2004

2006

2003 to2006

1999, 2002,2006

Yearly. Thelatest CPIAis 2006

2005 and2006

131 economiesin 2007-08

104 countries

41 countries

62 countriesin 2006

Ranks 30leadinginternationalor regionalexportingcountries in2006

Internationaldevelopmentassociation(IDA) eligiblecountries; 77countries in2006

ADB’s deve-loping membercountries withaccess toAsian Deve-lopment Fund(25 countriesin 2006)

To the extent thatcorruption affectsbusiness (Bribes forimport and exportpermits, bribes forgetting connected withpublic utilities, bribesin connection withannual tax payments)

Corporate IllegalCorruption Index,Corporate legalCorruption Index

The index measuresthe existence andeffectiveness ofpractices that preventcorruption

Measures both percep-tion of corruption andexperience of briberythrough public opinionsurvey

Captures the supplyside of corruption –the propensity of firmsfrom industrializedcountries to bribewhen operating abroad

Transparency, accoun-tability and corruptionin public sector;primarily used to linkIDA resource allocation

Transparency,accountability andcorruption ratings;primarily used to linkallocation of resources


TTTTTechnical Note 2echnical Note 2echnical Note 2echnical Note 2echnical Note 2

Mapping VMapping VMapping VMapping VMapping Vulnerability to Corruptionulnerability to Corruptionulnerability to Corruptionulnerability to Corruptionulnerability to Corruption

The most popular measures of corruption are based,at least in part, on perception but in any countrycorruption can be a response to structural and objectivefactors. This report has attempted to select someappropriate indicators.1

A list of 21 observable indicators was selected,based on theoretical and empirical justification anddata availability. The summary data for the 21observable indicators based on 17 Asia-Pacificcountries are presented below.

What are the links between these indicators andcorruption?

Indicators of Vulnerability to Corruption

Max Min Mean Std Dev

Highest marginal tax rate, individual rate (%) 47 20 33.7 6.24Highest marginal tax rate, corporate rate (%) 41 20 30.0 4.28Trade restrictiveness index [Tariff and NTF manufacturing] 0.22 0.04 0.1 0.06Start-up procedures to register a business (number) 13 7 9.5 1.84Procedures to enforce a contract (number) 56 20 34.6 11.68Procedures to register property (number) 9 2 5.5 2.12Military expenditure (% of GDP) 4.0 0.6 1.9 0.83Public investment (% of GDP) 16.2 2.4 7.4 3.81Ratio of the top 20% to bottom 20% 12.6 4.3 7.6 2.67Improved water source (% of population with access) 99 39 73.2 19.48Physicians (per 1,000 people) 2.6 0.1 0.6 0.66Combined primary, secondary and tertiary gross enrolment ratio (%) 82 38 62.9 12.21Mining (% of GDP) 19.5 0.4 5.2 6.34Literacy rate, adult total (% of people ages 15 and above) 97.8 41.1 75.0 20.05Internet users (per 1,000 people) 396.8 2.2 64.3 91.75Fixed line and mobile phone subscribers (per 1,000 people) 765.6 14.6 214.1 220.42Military personnel expenditure per capita/per capita income 12.1 0.5 4.8 3.25FDI (% of GDP) 5.8 0.1 1.8 1.64ODA (% of GDP) 16.2 0.1 5.8 9.01Share of informal sector (trade + const + other) % of GDP 52.4 22.6 41.4 8.14Currency in circulation (% of money supply) 25.5 4.9 13.9 5.67

Source: Gampat, Sarangi, Wickramarathne and Senarathne 2007.

High marginal tax rate. A high marginal tax ratecreates incentives for unscrupulous behaviour,including bribing of tax officials by individuals andbusiness to avoid compliance. Indeed, low tax revenue(to GDP) in many developing countries is partlyexplained by tax evasion. ‘Government imposes taxesto finance public services. But taxes must first becollected, and high tax rates do not always lead to hightax revenues. Between 1982 and 1999 the averageprofit tax rate worldwide fell from 46 per cent to 33per cent, while profit tax collection rose from 2.1 percent to 2.4 per cent of national income.’2 A recent publicopinion survey by Global Corruption Barometer 2006


for corruption. ‘Enforcing a simple contract in Indiatakes 56 procedures and almost 4 years. We do nothave any lawsuits pending – we simply avoid thecourts. By the time the judge decides the case, thedefendant’s assets have disappeared.’6

Level and nature of public expenditure. A high share ofpublic investment could also be an indicator of highvulnerability to corruption among public officials: thereis considerable evidence of massive corruption in publicprocurement (contracts), poor quality of materials andwork and widespread petty corruption in the publicsector.

Because military expenditures are exogenouslydetermined and are out of public scrutiny, this is anarea that offers much opportunities for rent-seekingbehaviour, including grand corruption stemming frommilitary deals.

Inequality. The literature suggests that inequality andcorruption are linked: ‘High inequality and strong anddistinct differences in power define the structural andcultural setting in which corruption takes place – grandcorruption as well as corrupt exchanges at the lowerranks of society.’7 Further, it seems that the linkbetween corruption and inequality is not direct: ‘Thereis a causal spiral from inequality to corruption (andback) and from both inequality and corruption to lowlevels of trust and from low levels of . . . trust tocorruption.’8 To capture this phenomenon, inequalityis proxied by the ratio of the income share of the top20 per cent to that of the bottom 20 per cent.

Access to services. The empirical literature suggests thatthere is pervasive corruption in basic public services,such education and health: ‘Cross-national studies onthe relationship between corruption and health andeducation outcomes find that health and educationoutcomes are worse in countries with high levels ofcorruption.’9 There is a significant relationshipbetween corruption and child mortality. People who donot have access to safe drinking water source are likelyto indulge in corrupt transactions to secure this basicnecessity. Similarly, scarcity of medical practitioners

found tax institutions to be the third most corruptpublic institution in Asia-Pacific countries.3

Trade policy. The literature suggests that restrictionsgenerate a significant amount of rents and rent-seekingactivities (Bhagawati 1982), including evasion of tariffs‘but also efforts at premium seeking when agentscompete for premium-fetching licenses, revenue seekingwhen agents try to appropriate a share of the revenueresulting from import restrictions, and tariff seekingwhen agents lobby for the imposition of protectionisttariffs . . . rents accruing from the imposition of traderegulations are both theoretically and quantitativelysignificant. . . . It follows that the degree of openness toforeign trade should be an important factor indetermining the level of rent-seeking activities, or theextent of corruption.’4 Thus, regulatory trade policiesthat restrict exports and imports or, more generally,that restrict market access to the rest of the world,affect business and the allocation of resources.Restrictions imposed by the rest of the world ofteninduce exporters to adopt corrupt practices to gainmarket access in other countries.

Regulatory and transaction costs. Multiple procedures(numerous gatekeepers) and high transaction costs canencourage corruption. Regulations create opportunitiesfor rent-seeking, which mean that bureaucrats have tobe bribed ‘to do what they are supposed to do’ (to avoiddelays in processing of documents) and also ‘to dowhat they are not supposed to do’ (to bypass rules andregulations that have high transaction costs).5 In termsof starting up a business, World Bank (2006) notes,‘[C]umbersome entry procedures mean more hassle forentrepreneurs and more corruption, particularly in adeveloping country. . . . Each procedure is a point ofcontact – an opportunity to extract a bribe.’ Similarly,if the registration of property is a complex, time-consuming and difficult task, it is, in effect, anincentive for assets to remain in the informal sector.Such assets cannot be used as collateral; propertyvalues are also lower if formal titles do not exist.Similarly, if contracts can easily be enforced thisencourages entrepreneurs, since it narrows the space


and of essential medicines creates fertile grounds forcorruption. Corruption in the education sector iswidespread and may take many forms, includingprocurement of basic materials and services,contracting, poor quality of services, absenteeism and‘ghost teachers’, bribes for admission and evencertificates, etc. Gupta et al. (2000), using univariateregressions, show that corruption is correlated withschool enrolment, repeater (failure) rates, dropoutrates, continued schooling through grade five andilliteracy. The coefficient for dropout rate is 0.36; forilliteracy and the repeater rate, it is 0.24.

Education is also critical for access to resourcesand opportunities. Higher access to public institutionsincreases awareness about public programmes createspressure among the public officials for improvingtransparency and accountability and encourages publicdebates about policies. There is also some evidence thatimprovement in education increases pressure (voice)from below. A fine example of this is work of a grassroot, mass-based initiative organization in India,known as Mazdoor Kisan Shakti Sangathan (MKSS),which was instrumental in the creation of Right toInformation Act. MKSS ‘walked from village to villageasking simple questions: Did the people know theamount of funds that was coming to their village fordevelopment? How was the money that came fromdifferent sources actually spent? Although thesequestions were simple, the poor and impoverished ofIndia had never dared to ask.’10 In short, MKSS armedthe poor with knowledge that led to greater access toinformation, which, hopefully, will have a negativeimpact on corruption. The other side of the coin is alsotrue: a high rate of illiteracy mean that people will notbe able to scrutinize public programmes, and therefore,vulnerability to corruption is high.

Dependence on natural resources. Natural resourcesexploration is an extremely high rent-seeking activity,possibly because a significant share of the revenuesaccrues direct to the government. Collier (2007),discussing what he calls the natural-resourcedependence trap, pointed out that a centralized sourceof easy and unaccountable cash is detrimental to a

fledgling democracy because it creates patronagemachines and lowers the pressure to develop a socialcontract that comes with effective taxation. Theassociated increase in rent-seeking opportunities mayhelp to explain the paradox Sachs and Warner (1995)noted: a negative relationship between natural resourceabundance and long-run economic growth. Using datafor some 70 countries, their estimates imply that anincrease of one standard deviation in natural resourceintensity (on average, 16 per cent of GNP), leads to areduction of about 1 per cent per year in economicgrowth. Leite and Weidmann (1999) obtained resultsthat are consistent with theoretical predictions: capital-intensive natural resource industries tend to induce ahigher level of corruption.11

Access to knowledge and information. The informationrevolution (internet, telephone and mobile phones) hassubstantially improved access to information in mostAsia-Pacific countries, particularly during the lastdecade. The diffusion of technology increases publicawareness about the government programmes andhelps to increase access to public services and reducesirregularities in distribution.

Relative wages in the public sector. Much has been saidabout the link between low public sector wages andcorruption. Mauro (1997) noted that ‘when civilservice pay is low, civil servants may be obliged to usetheir positions to collect bribes as a way of making endsmeet, particularly when the expected cost of beingcaught is low.’ Incentive structures thus become criticalin the fight against corruption. One such incentive isefficiency wages according to which firms sometimespay above-equilibrium wages to boost worker produc-tivity.12 Van Reickenghem and Weder (1997) usesefficiency wages to argue that, under certain circum-stances, higher wages in the public sector can detercorruption by increasing the potential loss resultingfrom detection. Using data on some 25 countries, thisstudy finds a significant impact of the public-privatewage differential on the level of corruption. Rauch andEvans (1999), in a study covering 35 developingcountries, present quantitative evidence to demons-


trate that corruption is higher in countries where civilservice recruitment and promotion procedures rely lesson merit-based considerations.

Importance of FDI/ODA. High foreign investments maymake a country more vulnerable to corruption,especially ‘grand corruption’ involving businesses andpoliticians. In fact there is a high correlation betweencorruption and FDI in countries with high levels ofcentralized corruption and state capture. Eggar andWinner (2005), studying 73 developed and lessdeveloped economies, observed that ‘corruption is astimulus for FDI, on the grounds that corruption canbe beneficial in circumventing regulatory andadministrative restrictions.’ In other words, there is ‘aclear positive relationship between corruption andFDI’. Wu (2006), studying cross-border direct invest-ment, used a distance measure of corruption betweenhost and source countries and finds that ‘corruptiondistance’ deters cross-border investment. Multina-tional firms with the capacity to engage in bribery doso whether or not there is transparency; those accus-tomed to operating in transparent environments findit difficult to overcome the administrative complexitiesin corrupt environments. Others find a negativerelationship between corruption and FDI (using theCPI as the measure of corruption) Lambsdorff (2005)argues that grand corruption deters investors for lessthan petty corruption because the former is morepredictable than the latter. It is plausible that ‘taxheavens’ and ‘special economic zones’, which areprevalent in Asia, create adequate space for corruptionbecause they invite investors with a series ofconcessions. Nevertheless, the jury is still out on linkbetween corruption and FDI. ODA is also prone tocorruption, as the literature on the link between ODAand growth suggests. If aid is given to corrupt regimes,then it can – and does – lead to corruption. ‘Too often,aid money is diverted for personal use. But some of italso ends up funding subversive activities – includingunjust wars – in sub-Saharan Africa.’13

Informal sector. The ‘informal sector’, for the purposesof this discussion, encompasses small-scale manufac-

turing, trade and transport services and other servicesthat are not counted by the formal sector. Particularlyin less developed countries, and even in developed ones,a relatively large number of firms operate in aninformal fringe. While these firms have the capacity toplace their products in the markers, they do not paytaxes and go largely unnoticed by the authorities. Thevery existence of the informal sector suggests that entryinto the formal sector is regulated or excessively costly.‘This immediately suggests that corruption oradministrative inefficiency could be on the basis of suchphenomenon. Anecdotal as well as documentedevidence suggests that corruption, the informal sectorand government behaviour play an important role inthe determination of welfare and growth in adeveloping economy, if not an advanced one.’14 De Soto(1989, 2000) notes that start-up costs and red tapeare a major determinant of the size of the informalsector. Bureaucrats, in an effort to maximize privategains, often have an incentive to set costly artificialbarriers, which not only push firms underground butalso has a negative effect on growth.

Extent of cash transactions. Many empirical studies haveshown that cash in circulation, especially if itconstitutes a high share of money supply, is anindicator of a sizeable black economy, corruption andmoney laundering. Currency in circulation as apercentage of money supply is thus a reasonableindicator of vulnerability to corruption.

NotesNotesNotesNotesNotes

1. Gampat, Sarangi, Wickramarathne and Senarathne 2007.2. World Bank 2006.3. Tran 2007.4. Leite and Weidmann 1999.5. Bardhan 2006.6. World Bank 2006b.7. Karstedt n.d.8. Uslaner 2006.9. Azfar and Azfar 2007.

10. Kumar 2007.11. Leite and Weidmann (1999) use the ICRG index as a

measure of corruption.12. Mookherjee and Png 1995; Basu et al. 1992.13. Okoye 2007.14. Antunes 2007.


Definitions of TDefinitions of TDefinitions of TDefinitions of TDefinitions of Technical Technical Technical Technical Technical Termsermsermsermserms

Accession The act whereby a state acceptsthe offer or the opportunity to become partyto a treaty already negotiated and signed byother states. It has the same legal effect asratification. Accession usually occurs afterthe treaty has entered into force.

Anti-corruption agencies Separate, per-manent agencies with the primary functionof providing centralized leadership in coreareas of anti-corruption activity, includingpolicy analysis and technical assistance inprevention, public outreach and information,monitoring, investigation, and prosecution.

Bribery The act of offering someonemoney, goods or services in order to persuadehim or her to perform an action, often illegal,in the interests of the person offering thebribe.

Civil service Refers to the civilianemployees of a government in the variousministries and includes teachers andpolicemen but not the military, judiciary orthose employed in statutory boards or publicenterprises.

Clientelism An informal form of socialorganization characterized by ‘patron-client’relationships between people of differentsocial and economic status: a ‘patron’(relatively powerful and wealthy) and his/her‘clients’ (relatively less powerful andwealthy). The relationship includes a mutualbut unequal exchange of favours, which canbe corrupt. (Patrimonial and clientelist

practices can institutionalize hegemonic elitesand political corruption, often reaching thehighest ranks of state power).

Collusion A usually secretive act ofcooperation or collaboration among two ormore parties to mislead or defraud others (oftheir rights).

Counterfeit drugs Medicines, which havebeen deliberately and fraudulently mislabelledwith respect to identity and or source.Counterfeiting can apply to both branded andgeneric products and counterfeit productsmay include products with the correctingredients or with the wrong ingredients,without active ingredients, with insuffi-cient active ingredients or with fakepackaging.

Cronyism Favouritism shown in treatmentof friends and associates, without regard totheir objective qualifications; could be treatedas a form of corruption.

Cultural determinism Refers to a convic-tion that culture determines and dominatesour behavioural and emotional approaches toissues of society and existence.

Cultural pluralism A term used whensmall groups within a larger society maintaintheir unique cultural identities. In a pluralistculture, unique groups not only coexist sideby side, but also consider qualities of othergroups as traits worth incorporating intotheir own culture.

DEFINITIONS OF TECHNICAL TERMSDEFINITIONS OF TECHNICAL TERMSDEFINITIONS OF TECHNICAL TERMSDEFINITIONS OF TECHNICAL TERMSDEFINITIONS OF TECHNICAL TERMS 229229229229229

Cultural relativism The principle that anindividual human’s beliefs and activitiesshould be interpreted in terms of his or herown culture.

Dry departments Government offices thatdo traditional administrative work and havelittle contact with the public. Hence drydepartments have reduced opportunitiesfor corruption compared with ‘wet depart-ments’.

e-Governance Refers to governmentagencies’ use of information technology (suchas internet and mobile computing) that havethe anticipated ability to transform andimprove relations with citizens, businessesand other arms of government, as well asreducing corruption.

Embezzlement The misappropriation ofproperty or money by a person in a formalposition of trust or responsibility over thoseassets. Could also be a form of corruption,depending on the definition adopted.

Extortion Unlawful demand or receipt ofmoney or favour through the use of force orintimidation.

Extradition Legal surrender by onecountry to another of an individual accusedor convicted of an offence within thejurisdiction of the other country.

Favouritism Abuse of power to favourfriends and relatives over others. It can be aform of corruption, for example when apublic officer gives priority to his/her familymembers.

Fraud An economic crime involving mis-representation done to obtain unlawful gains.

Free-riders In the context of this report:individuals, concluding that reduced corrup-tion will benefit nearly everyone, leave thehard work and risks of reform to others,knowing they stand to benefit from anysuccesses whether they have participated ornot.

Gift economy An ‘economic system’ inwhich goods and services are given withoutany explicit agreement for immediate orfuture quid pro quo. Typically, a ‘gifteconomy’ occurs in a culture or subculturethat emphasizes social or intangible rewardsfor generosity and gratitude. In some cases,simultaneous or recurring giving serves tocirculate and redistribute valuables within acommunity. This can be considered a form ofreciprocal altruism. Sometimes, there is animplicit expectation of the return of compara-ble goods or services, political support, or thegift being later passed on to a third party.

Ghost institutions Institutions that showup on account books but do not actually existanywhere. Examples include ‘ghost schools’that process vouchers without providingeducation; a form of corruption.

Ghost workers Staff that show up onaccount books but do not actually exist inreality. They are fictitious workers inventedto siphon off resources by corrupt persons.

Graft (Verb) To obtain money dishonestlyby exploiting one’s position of power orauthority. (Noun) The rewards of corruption:the loot, booty, payoffs, or spoils.

Grand corruption Corruption involvingsubstantial amounts of money and usuallyhigh-level officials to secure commercialcontracts or some other business advantage.


Grease money Facilitation payments,usually small amounts of money given toofficials to make things move more smoothlyand speedily. Usually associated with pettycorruption.

Integrity system An integrity system is apolitical and administrative arrangement thatencourages integrity (adherence to a set ofmoral or ethical principles). A country’sNational Integrity System (NIS) comprises thewhole of government and non-governmentalinstitutions, laws and practices that can, iffunctioning properly, minimize levels ofcorruption and mismanagement. The conceptof NIS has been developed and promoted byTransparency International as a frameworkwith which to analyse corruption in a givennational context, as well as the adequacyand effectiveness of national anti-corruptionefforts.

Kickback An illegal secret payment madeas a return for a favour or service rendered; aform of corruption.

Lobbying An attempt to influence an out-come in favour of or against a specific cause,typically directed at government and electedofficials.

Money laundering The process wherebythe origin of funds generated by illegal meansis concealed so that it appears to come from alegitimate source. Money laundering is oftenuse to disguise the proceeds of corruption,and aims at inserting them into economiccirculation.

Nepotism Granting offices, contracts andbenefits to friends and relatives, regardless ofmerit.

Perks Refer to entitlements or favours

bestowed upon an individual based on theoffice/position held.

Petty corruption Corruption involvingsmaller sums and typically involving morejunior officials; also known as administrativecorruption or retail corruption. It coverseveryday corruption that takes place at theimplementation end of policies, where publicofficials interact with the public. Pettycorruption is bribery in connection with theimplementation of existing laws, rules andregulations.

Political will The demonstrated andcredible intent of political actors to attackperceived causes or effects of corruption at asystemic level.

Principal-agent model Explains howcorruption occurs when an agent betrays thepower entrusted in him/her by a principal topursue his/her own interest by accepting orseeking a benefit from a service seeker, theclient.

Ratification Defines the international actwhereby a state indicates its consent to bebound to a treaty if the parties intended toshow their consent by such an act.

Red tape Excessive formal rules andprocedures, which increases the potential forcorrupt interactions and impedes/retardspeople’s access to public services. ‘Speedmoney’ is often paid to bypass red tape andspeed up transactions.

Relationship banking A long-term, inti-mate and relatively open relationship estab-lished between a corporation and its banks.Banks often supply a range of tailor-madeservices rather than one-off services. InJapan, Relationship Banking is known as

DEFINITIONS OF TECHNICAL TERMSDEFINITIONS OF TECHNICAL TERMSDEFINITIONS OF TECHNICAL TERMSDEFINITIONS OF TECHNICAL TERMSDEFINITIONS OF TECHNICAL TERMS 231231231231231

Kairetsu – a term also used in many otherEast Asian countries during and following theeconomic crisis.

Rent seeking Rent seeking generallyimplies the extraction of uncompensatedvalue from others without making anycontribution to productivity, such as bygaining control of land and other pre-existing natural resources, or by imposingburdensome regulations or other govern-ment decisions that may affect consumersor businesses. Rent seeking in the aggre-gate may impose substantial losses onsociety.

Right to information legislation Legis-lation that gives all citizens and organizationsa legal right to demand and obtain informa-tion from public bodies and those who areperforming public functions, and an obliga-tion on all public bodies to publish, on aproactive or routine basis, key categories ofinformation.

Speed money Bribes paid to quicken thedelivery of services delayed by bureau-cratic holdup (red tape) and shortage ofresources.

State capture Where the state is heldcaptive to the actions of individuals, groups,or firms who influence the formation of laws,rules, and regulations to serve their private

interests by offering private benefits to publicofficials, changing the rules of the game. It isa way of ‘legalizing’ corruption.

System of checks and balances A mecha-nism that allows each branch of a governmentto amend or veto acts of another branch so asto prevent any other branch from exerting toomuch power.

Tax haven A country or independentregion where there are no or nominal taxesand there is lack of transparency and minimalexchange of information.

Wet departments Government offices thatdeal with many people outside governmentand are typically concerned with money,planning, banking, or public enterprises.They are also usually generous withhonoraria, allowances, service on committeesand boards, and carry many opportunities forforeign training ‘wet’ departments are morevulnerable to corruption than ‘dry’departments because of their bigger budgetsand access to the public.

Whistle-blower protection Measures(administrative or legislative) to protectpeople who alert the public or the autho-rities about corrupt transactions they havewitnessed or uncovered. Whistle-blowerprotection shields these people fromreprisals, from those they expose.


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